IRS Card Exemption Rises to €10.37 in 2027

The Government’s proposal to increase the food subsidy in the public sector to 6.10 euros in 2027 increases the IRS exemption on the subsidy paid in the private sector through a meal card to 10.37 euros.

The increase is automatic, the result of a rule enshrined in the IRS Code.

The legislation provides that the subsidy, whenever “awarded through meal vouchers”, is only subject to IRS in relation to the portion that exceeds “the established legal limit” by 70%.

As the threshold used as a reference for this calculation is the amount of the subsidy granted to Public Administration workers and, on Wednesday, the executive proposed to the unions an update of the value from the current six euros per day to 6.10 euros in 2027, the value of the IRS exemption will increase automatically depending on this increase of 10 cents.

The updating of the tax exemption level occurs either when the subsidy is paid in cash by employers (together with the salary), or when it is paid through meal cards (pre-paid bank cards, the amount of which cannot be withdrawn, only spent on purchases from supermarkets, restaurants and cafes that have a contract with the card operator).

The IRS Code provides for two distinct limits for exemption, depending on the way in which the subsidy reaches workers’ accounts.

If an employer pays a subsidy in the traditional way, the IRS exemption goes up to that amount, which, at the moment, means being exempt from IRS up to six euros per day. If the subsidy is higher, the worker pays IRS on the part that is above that level (for example, if the subsidy is 11 euros per day, the worker is exempt on the first six euros and pays IRS on the remaining five euros).

If an employer delivers the benefit on a card, the exemption is higher, currently going up to 10.20 euros. If, for example, the meal allowance is 11 euros, the worker only pays IRS on 80 cents.

If the Government’s final decision to increase the subsidy corresponds to the proposal presented to public administration unions on Wednesday, there will be an update to each of the tax exemption levels in 2027.

Thus, in the case of the subsidy paid in cash, it goes from the current six euros to 6.10 euros and, in the case of the subsidy transferred by card, it goes from the current 10.20 to 10.37 euros.

For 2026, no changes are planned in relation to the current situation. The Government proposes to keep the subsidy unchanged at six euros per day in 2026.

The executive only foresees an update of 10 cents per day in each of the years from 2027 to 2029, increasing the subsidy to 6.10 euros in 2027, to 6.20 euros in 2028 and to 6.30 euros in 2029.

The last time the value of the meal allowance was increased in the public service was in April 2023, with effect from January 1st of that year, by decision of the PS Government of António Costa, when Fernando Medina was Minister of Finance.

At the time, the difference in IRS exemption between the subsidy paid in cash and the amount paid by card was 60%, not 70%, as currently.

Later, in 2025, this difference became 70%, the result of a change introduced by the Government of Luís Montenegro in the State Budget law proposal for 2025.

The increase now proposed for 2027, 2028 and 2029 falls short of the unions’ demands.

At the end of Wednesday’s meeting at the Ministry of Finance, the secretary general of Fesap, José Abraão, stated that the 10 cents “is not even enough to buy a loaf of bread today”.

The coordinator of the Common Front, Sebastião Santana, said that this was the only “news” brought by the Government in relation to the proposed addendum to the multi-annual agreement currently in force, having accused the Government of “continuing to make Public Administration workers lose their purchasing power for another year”.