How to simulate raises and tax benefits

What is it for?

Before deciding on a raise, Management wants to know how much it costs the company over the year and whether it helps reach a tax benefit. The Tax benefits and raises screen does that calculation with the real salaries and the payroll processing, in simulation mode: nothing is saved.

When to use it?

• Before deciding on or announcing salary raises, to know how much they cost the company until the end of the year and over a full year.
• To compare alternatives before deciding: as a percentage or a fixed amount, for everyone or only some of the staff, starting in different months.
• To confirm that, after the raise, nobody is below the minimum wage.

Where to find it?

• Management profile: Management › People › Tax benefits and raises.
• Payroll Administrator profile: People › Contracts and departures › Tax benefits and raises.

Before you start

• Your profile is Management (or Payroll Administrator). The other profiles do not see this screen: it contains salaries.
• The employees have a contract and salary recorded: the cost comes from them. To see the existing cost, without a raise, use How much each employee costs the company.
• The People assumptions (average IRS rate, work accident insurance) are filled in: they go into the cost. The People assumptions button at the top of the screen opens them.

How to use it

1. Open Tax benefits and raises (see “Where to find it?”). While it calculates, the screen says “Calculating the cost of the raise with the payroll. This can take a few seconds.”. Wait for the tables to appear before touching the fields: only then do they show the raise and the month of the example.
2. In Raise by, choose Percentage or Fixed amount (in euros per month).
3. In Value, type the raise, use - and + or the slider, or click one of the Quick choices (in the example, 4.6%, 3.0%, 5.0% and 6.0%).
4. In To whom, choose All, Those who earn up to the average or A department.
5. In From month, choose the month the raise starts. In the example, the screen opened on month 11 (November).
6. Leave Guarantee the minimum wage ticked so that nobody ends up below the minimum wage after the raise.
7. Read the tables, which change with each change you make (see “Expected result”).

Expected result

The tables show:

• Cost of the raise in the year: the cost of the payments still due until December, from the chosen month: the salaries of those months, the Christmas allowance and the holiday allowance, if it has not yet been paid this year. Below, the screen says how much is left after the IRC saved (or why no IRC is saved) and how much it would cost over a full year (14 payments). Pending validation by a certified accountant: cost of the allowances in the year of the raise.
• Tax benefit within reach: the value of the tax benefits with the simulated raise, split between the euros “available now” and those “still to unlock”. It changes when the raise changes.
• Does the raise reach the minimum?: whether the raise meets the benefits' condition (see “Important notes”).
• Below the minimum wage: how many people would earn less than the minimum wage.
• Cost by department: people, cost in the year and over a full year, by department.
• How to get it (the real situation, without the simulated raise): the steps of each benefit and their status (To do or Blocked).
• The Cost and IRC saved, in the year and Increase reached and minimum required charts. The second shows the Simulated raise bar next to the Minimum required bar (see “Important notes”).

Example. In Empresa Demonstração, Lda, on 3 November 2026, for All (8 people, no department) from month 11. The year counts 4 payments: November, December, the Christmas allowance and the holiday allowance, which the demo has not yet paid this year.

Raise	Cost in the year	Over a full year	Tax benefit within reach
4.6%	€2,632.16	€9,212.56	€1,972.84
5.0%	€2,861.00	€10,013.50	€1,980.38
6.0%	€3,433.28	€12,016.48	€1,999.24

In all three cases:

• the benefit is entirely “still to unlock” (€0.00 available now);
• Cost of the raise in the year says “No IRC is saved: the company has no profit this year (result -€59,331.84), so the cost only increases the tax loss.”;
• Does the raise reach the minimum? says Cannot be measured: “The condition compares the wages of today with those at the end of 2025, and the company had no wages then, so there is no raise to measure.”;
• Below the minimum wage stays at 0.

The screen says “Nothing is saved: the payroll calculates it as a simulation and discards it”. The simulation does not change contracts or payslips.

Important notes

• The benefits have conditions. The screen mentions two: exempt bonuses and the increased IRC deduction for raises (“IRC: raises (EBF art. 19.º-B)”). According to the screen text, the cost of a raise is already 100% deductible without the incentive, so the IRC benefit is only the extra from the increased deduction times the IRC rate, and each employee's charges count up to 5 times the minimum wage. Pending validation by a certified accountant: conditions and limits of the increased deduction under art. 19.º-B of the Tax Benefits Statute (EBF) and of exempt bonuses.
• The “IRC saved” only counts up to the year's profit. The screen applies the IRC rate to the cost of the raise, but never beyond the year's result to date, before tax. With no profit (like the demo in 2026), it saves no IRC that year and says why: the cost only increases the tax loss, which only reduces IRC in later profitable years. The result is the accounting one, without the adjustments of the IRC return: it is an estimate. Pending validation by a certified accountant: IRC rate to use (including the reduced SME rate) and effect in loss-making years.
• Measure the raise (button at the top) corresponds to the “Measure the raise of the year” step of “How to get it”. It is not part of the simulation and is not covered in this article.
• “Cannot be measured”. The condition compares today's salaries with those at the end of the previous year. If the company had no salaries on that date (like the demo at the end of 2025), there is no raise to measure: the table says Cannot be measured and the Smallest raise that unlocks the benefits button answers with the same explanation. When the company had salaries at the end of the previous year, the table compares the raises with the year's minimum and the button looks for the smallest raise that meets the condition. The demo does not have those salaries, so this article does not show that case.

Common problems

The screen stays on “Calculating the cost of the raise…”

• Cause: the calculation runs the payroll processing for everyone.
• What to do: wait. In the demo, the tables appeared 5 to 10 seconds after opening the menu. Until then, the fields at the top do not yet show the example's choice: do not change them before the tables appear.