Madeira does not discount the national scale. It swaps it out.
If you arrived here from our Spain pages, drop that mental model at the door. A Spanish region adds its own half of the scale on top of the state half. Madeira’s regional budget prints a complete nine-bracket table of its own and applies it in place of the national one, “em substituição” in the decree’s own words. Same bracket limits as the mainland, same method, a different rate on every single line.
The size of the swap: the mainland scale opens at 12.5% and ends at 48% above €86,634. Madeira’s opens at 8.75% and ends at 33.6% over the same threshold. Mid-scale, the bracket from €29,397 to €43,090 carries 24.43% against the mainland’s 34.9%. Every regional rate is exactly seventy per cent of the national rate beside it: the deepest cut the framework law on regional finances allows, taken on every bracket.
The method survives the swap intact. Portugal does not tax slice by slice, and neither does Madeira: taxable income above €8,342 is split in two, the part equal to the largest bracket ceiling that fits inside it taxed at the average rate printed in column B for that bracket, the excess at the column-A rate of the bracket above. The regional decree restates that rule word for word and prints its own column B, worked from Madeira’s own rates.
That printed column is data, not arithmetic you can shortcut: in the fifth bracket the law says 14.406 where seventy per cent of the mainland’s printed column would give 14.405. A rounding hair, but the calculator applies the printed figure, because that is what the assessment will use.
What stays at the national rate
The solidarity surcharge does not shrink. 2.5% on taxable income above €80,000 and 5% above €250,000 apply in Funchal exactly as in Lisbon: the regional decree replaces the general table and expressly keeps every other IRS rate national until a regional law reduces it, which for the surcharge has never happened. On a big salary the scale saving is still enormous, the top slice paying 33.6% instead of 48%, but the surcharge rides on top of both at full strength. Budget for it.
Everything else on a payslip is national law too: social security at 11%, the specific deduction, the fixed family credits, IRS Jovem, IFICI. The Portugal salary page walks through those mechanics; they land on the island unchanged.
Who gets the regional table
Being a Portuguese tax resident comes first. On top of that, you are a Madeira resident for a tax year when you spend more than 183 days of it in the region, your habitual residence is there and you are registered there for tax. When the day count settles nothing, the fallback is where your principal centre of interests sits. The test is built on where you live; where your employer or your clients sit plays no part in it.
A worked example
Take €40,000 gross in Funchal, single, no dependants. Employee social security takes €4,400, the specific deduction is €4,587.09 (the fixed floor still beats the contributions at this salary), and the taxable base lands on €35,412.91. The Madeira table splits that base at the €29,397 ceiling, charges the printed average rate on that part and the next bracket’s rate on the €6,015.91 excess: IRS of about €5,705, roughly 14.3% of gross, with about €29,895 reaching your account over the year.
Run the identical base through the mainland table and the tax is about €8,149. Same salary, same deductions, same two-part method; the table is the whole difference, and at this income it is worth about €2,445 a year.
The floor we cannot model yet
The regional tax office says the mínimo de existência, the abatement that keeps low salaries out of IRS, is reinforced in Madeira so that the regional minimum wage, higher than the mainland one, stays fully exempt. We went looking for the rule and did not find it: the entire regional budget decree contains no such provision, so whatever makes it work happens somewhere we cannot cite. We do not model law we cannot read. The calculator therefore applies the national abatement, which overstates the tax of low earners on the island. The error runs one way, in your favour, and this page changes the day the mechanism surfaces in a citable norm.
What changed in 2026
This is the first year the discount runs at full depth everywhere on the scale.
Through 2025 the differential faded as you climbed: 30% off the lower brackets, 15% in the middle, 9% at the very top. For 2026 the regional budget takes the full 30% on all nine brackets, which is why the gap against the mainland is wider than it has ever been, and why any comparison you read a year ago undersells it.
Bracket limits were indexed 3.51% for 2026, in step with the mainland, so the two tables still align threshold for threshold and the entire difference sits in the rates.
The same budget also sketches a Madeira-specific extension of IFICI for new residents in highly qualified professions, effective from 2026 on paper but waiting on an implementing regional regulation. Until that regulation exists there is nothing concrete to apply, so the calculator does not.