Portugal ended NHR. Here is what a US retiree actually pays now.

Last verified 6 September 2026. Professional review pending — per our methodology, tax pages are reviewed by a licensed professional before we treat them as final. The structure below is well corroborated; the exact bracket table and the treaty's own wording are flagged as unverified in section 5, and we would rather say so than round a number for you.

The single most common piece of out-of-date advice about retiring to Portugal is the 10% pension rate. It is gone. NHR closed to new entrants on 1 January 2025, and the regime that replaced it was built for a different kind of person on purpose: researchers and highly qualified professionals, not retirees. If your income is a pension, you are now taxed on Portugal's ordinary scale like anybody else living here.

1. What replaced NHR, and why it does not help you

The successor is IFICI — Incentivo Fiscal à Investigação Científica e Inovação, widely marketed as "NHR 2.0". It gives a 20% flat rate on Portuguese-source employment and self-employment income to people working in qualifying activities: scientific research, higher education, certain innovation and technology roles, and other strategic sectors.

Read what that sentence does not contain. It does not contain pensions. It does not contain foreign passive income as a category of relief for retirees. IFICI excludes retirees and passive-income holders from its benefit, which was a deliberate policy choice, not an oversight. If you are moving to Portugal to stop working, IFICI is not a regime you are trying to qualify for — it is a regime you are outside of.

The practical rate difference is large. Under the later NHR cohort a foreign pension met a flat 10%. Without it you meet the ordinary IRS scale, which runs progressively up to roughly 48% at the top. Someone drawing a substantial pension went from a flat 10% to a progressive scale — the kind of change that moves a retirement budget by tens of thousands of euros a year, and the reason so much older advice about Portugal is now actively misleading.

2. Your pension and your Social Security are not the same thing

This is the part that guides skip, and it is the part that decides your number. The US–Portugal income tax convention treats two kinds of retirement income differently:

Private pensions — a 401(k), an IRA, a corporate pension. Generally taxable only in your country of residence. Once you are a Portuguese tax resident, that means Portugal, on the ordinary progressive scale.
US Social Security and other public pensions — different rule. The treaty lets the paying state tax them: social security paid by one state to a resident of the other, or to a US citizen, may be taxed by the state that pays it. Because you also live in Portugal, both countries can end up with a claim on the same money — and the treaty then obliges your country of residence to give relief for the tax the other one charged.

So the honest summary is not "Portugal taxes everything" or "the treaty protects you". It is: your private pension moves to the Portuguese scale, your Social Security stays in the US net and gets relieved rather than exempted. Which of those dominates depends entirely on your own mix, and it is why a generic "what will I pay in Portugal" number is worthless.

3. You do not stop filing in the US

Worth stating plainly because people are genuinely surprised: the United States taxes its citizens on worldwide income wherever they live. Moving to Portugal does not end your US filing obligation, and the treaty does not change that — treaties carry a saving clause that preserves each country's right to tax its own citizens. What stops you being taxed twice on the same euro is the foreign tax credit machinery, claimed on your US return, plus the relief Portugal owes you under the treaty.

Two consequences people underestimate: you now file in two systems with different tax years and different definitions, and you will almost certainly need a preparer who works across both. Budget for that as a recurring cost of living abroad, not a one-off.

Nothing here is tax advice, and this is the page on this site where that disclaimer carries the most weight. Cross-border retirement tax is genuinely individual: a licensed US expat-tax professional and a Portuguese accountant, together, will save you more than any article. Do that before you establish residency, not after.

4. What this changes about the decision

Rerun your numbers if you planned this before 2025. Any budget built on a 10% pension rate is wrong by a wide margin. Our cost-of-living guide covers the spending side; this is the income side, and it moved more.
Portugal is now a lifestyle decision, not a tax arbitrage. That is arguably how it should have been all along — but it means the honest comparison is against other places you would actually like to live, not against a spreadsheet.
Timing of residency matters. When you become a Portuguese tax resident determines which year your worldwide income lands on the Portuguese scale. That interacts with a Roth conversion, a property sale, or a lump sum in ways worth planning a year ahead.

5. What we have not verified

We publish our gaps rather than rounding them away:

The 2026 IRS bracket table. We describe the scale as progressive to roughly 48% because that is consistently reported, but we are not printing a bracket-by-bracket table until we have checked it against Portugal's own published scale. A wrong bracket here would produce a wrong retirement budget.
The treaty's exact wording. The Article 20 split described above is corroborated across the Senate's committee report on the convention and multiple expat-tax practices, but the US Treasury's own copy is a scanned document and both Congress.gov and SSA.gov refuse automated access, so we have not yet read the operative sentence in the original. We will quote it verbatim when we have.
IFICI edge cases. Whether any part-time or consulting work you might do in Portugal could qualify you for the 20% rate is fact-specific, and we have not mapped the qualifying-activity list.

Sources: US–Portugal income tax convention, Article 20 (Pensions, Social Security, Annuities, Alimony and Child Support), and Senate Executive Report 104-8 on that convention · IFICI regime (successor to NHR, in force from 1 January 2025) as summarised by Skybound Wealth, Global Citizen Solutions and Immigrant Invest · US–Portugal Totalization Agreement (SSA). Every claim above carries the date we checked it; see section 5 for what is still outstanding.