OE2025: What is planned for young IRS?

What is predicted for young people's income tax in 2025?

The new proposal for the youth income tax, included in the State Budget for 2025 already submitted by the Minister of Finance, aims to be more comprehensive.

The regime applies to dependent and independent work incomes for individuals, now up to 35 years. The exemption period is extended to 10 years, starting in the first year of income and continuing for the following nine years.

The percentages of exemption provided are:

• 100% in the first year;

• 75% in years two, three, and four;

• 50% in years five, six, and seven;

• 25% in the eight, nine, and ten years.

However, the exempt income is limited to 28,009.30 euros, equivalent to 55 times the value of the current Indexante dos Apoios Sociais (IAS). That is, up to that value it is possible to access the benefit, and, upon exceeding that value, only the surplus is subject to the normal regime.

Note that the exemption does not apply in years when no income of this type is earned. However, beneficiaries may restart the regime in the remaining years once they have this income again, up to a total of ten years of exemption, respecting the age limit of 35 years.

In addition, this benefit will be excluded for taxpayers who:

• Have benefited from the non-habitual resident regime;  

• Have received the tax incentive for scientific research and innovation, in accordance with article 58-A of the EBF.

• They have opted for taxation under the former resident regime.

• Do not have your tax situation regularized.

This new measure aims to financially support young people, promoting their economic and social stability, and helping to combat job insecurity, to facilitate access to first employment and the development of professional careers.

OE2025 directs many support measures to young people and the pockets of the Portuguese: continue to follow them by subscribing to the weekly newsletter of Poupança no Minuto and follow us on social media.