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Employees receiving their Christmas bonus in November 2026 may benefit from an extraordinary 50% reduction in Personal Income Tax (IRS) withholding, potentially resulting in a higher net payment.
The measure was established by Order No. 12523-A/2026 of 14 October and applies to eligible income paid or made available during November.
How Does the 50% IRS Withholding Reduction Work?
During November 2026, the amount of income tax normally withheld from eligible employment income and pensions is reduced by half.
This reduction also applies to Christmas bonuses paid during the same period, provided the legal conditions are met.
For example, if the usual withholding on a Christmas bonus is €200, the amount withheld may fall to €100, allowing the employee to receive an additional €100 in that payment.
Exceptions apply, particularly to higher-income earners, according to the limits established in the withholding tables.
During November 2026, the amount of income tax normally withheld from eligible employment income and pensions is reduced by half.
This reduction also applies to Christmas bonuses paid during the same period, provided the legal conditions are met.
For example, if the usual withholding on a Christmas bonus is €200, the amount withheld may fall to €100, allowing the employee to receive an additional €100 in that payment.
Exceptions apply, particularly to higher-income earners, according to the limits established in the withholding tables.
Is Receiving the Christmas Bonus in December Different?
Yes. This extraordinary reduction applies to eligible payments made between 1 and 30 November 2026.
From December onwards, the standard withholding tables apply without this temporary adjustment.
The payment month may therefore influence the net amount employees receive.
Yes. This extraordinary reduction applies to eligible payments made between 1 and 30 November 2026.
From December onwards, the standard withholding tables apply without this temporary adjustment.
The payment month may therefore influence the net amount employees receive.
Does This Mean Employees Pay Less Income Tax?
Not necessarily.
It is important to distinguish between income tax withholding and the final annual tax liability.
Withholding represents an advance payment of IRS, while the final tax amount is calculated through the annual income tax return.
As a result, receiving a higher net payment in November does not necessarily mean paying less income tax overall.
Not necessarily.
It is important to distinguish between income tax withholding and the final annual tax liability.
Withholding represents an advance payment of IRS, while the final tax amount is calculated through the annual income tax return.
As a result, receiving a higher net payment in November does not necessarily mean paying less income tax overall.
What Should Employers Consider?
Employers must ensure their payroll systems correctly apply the temporary withholding rules and comply with all applicable legal conditions.
Accurate payroll processing helps businesses meet their tax obligations while ensuring employees receive the amounts to which they are entitled.
Employers must ensure their payroll systems correctly apply the temporary withholding rules and comply with all applicable legal conditions.
Accurate payroll processing helps businesses meet their tax obligations while ensuring employees receive the amounts to which they are entitled.
