Exceptional Reduction in Personal Income Tax Withholding in November 2026

In November 2026, employees and pensioners will see an increase in their net income. The Government has announced a 50% reduction in personal income tax (IRS) withholding on salaries and pensions paid during that month.

The aim is to ensure that taxpayers benefit immediately from the reduction in income tax rates approved for 2026, without having to wait for their annual tax declaration in 2027.

In practice, less income tax will be withheld in November, resulting in a higher net payment to employees’ and pensioners’ bank accounts. In December, the withholding rates currently in force will be applied again.

We consider this to be a straightforward and easily understandable measure for taxpayers. By halving the withholding tax for a single month, the benefit becomes immediately noticeable, particularly at a time of the year when many households face increased expenses.

However, it is important to remember that withholding tax is merely an advance payment of income tax. This means that the additional amount received in November does not represent an additional tax reduction, but rather the early delivery of a tax benefit that would already result from the reduction in tax rates.

For this reason, similarly to previous cases involving extraordinary adjustments to withholding tax, some taxpayers may receive a lower-than-usual tax refund when they file their tax returns in 2027. In certain cases, they may even have additional tax to pay. This does not represent an increase in tax, but simply a tax adjustment resulting from the lower amount withheld throughout the year.

Practical Example:

An employee earning a gross monthly salary of €2,000, who would normally have €300 withheld in income tax, will see this amount reduce to €150 in November. As a result, they will receive an additional €150 in net income that month.

If the Christmas bonus is also paid in November, the reduction in withholding tax will apply to that payment as well, further increasing the net amount received.

In Summary:

• Higher net income in November

• Applicable to salaries and pensions paid during that month

• Does not represent a permanent increase in income

• May result in a lower income tax refund in 2027