Madeira taxes income less than mainland Portugal. Not through a scheme, an application, or a loophole — through its constitutional autonomy, written into the regional finance law, applied automatically to every Madeira tax resident.
THE NUMBERS. Autonomous regions may set IRS rates up to 30% below the mainland. From 1 January 2026, Madeira applies that maximum differential to all nine brackets (previously it was concentrated in the lower ones). The thresholds match the mainland; each Madeira marginal rate is the mainland rate × 0.70. In practice: the lowest bracket falls to 8.75% (mainland 12.5%); the top bracket, on income above €86,634, lands around 33.6% versus the mainland’s 48%. Capital income taxed at the flat Article 71 rate drops to about 19.6% versus 28%.
Nothing to file for. If you are a genuine Madeira tax resident with your tax domicile registered here, the regional table simply applies. The regional government reports its tax reductions have returned over €748 million to residents since 2016.
THE ONE CONDITION THAT MATTERS. Genuine, is the word. The reduced table belongs to real Madeira tax residents — the 183-day rule or the habitual-home test, plus a domicile the tax authority will not read as paper. We covered the part-time stayer’s honest options separately; the short version is that this benefit is the reward for actually living here, and it stacks with everything else on this island: for qualifying new residents, IFICI on top; for business owners, the corporate rates in the next article.