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💶 OE 2025 is Law: Tax Adjustments and Incentives for the Young Start Tomorrow
The State Budget for 2025 (Law no. 86/2024) introduces tax relief, expanded Youth IRS for workers up to 35 years old, and increased meal allowances starting January 1.
The State Budget for 2025 (Law no. 86/2024) was published today, December 30, 2024, which will introduce several tax changes tomorrow, January 1, impacting residents, including foreigners.
Overall, the budget’s theme is tax relief and incentives for youth employment:
- IRS Adjustments: The taxable income limits for each IRS bracket have been raised by approximately 4.62%, slightly above expected inflation. This will result in a small reduction in the tax bill for many taxpayers.
- Increased Meal Allowance: The tax-exempt meal allowance amount (paid via card) has increased from €9.60 to €10.20 per day.
- Expanded Youth IRS: The big news is the expansion of the Youth IRS program to all young people up to 35 years old (regardless of being recent graduates), and the benefit has been extended from 5 to 10 years with substantial income exemptions.
- No Rate Increases: The maximum marginal IRS rate remains 48%, and VAT and other rates have been maintained.
Foreign residents working in Portugal will benefit from these general measures, especially the bracket expansion and the large tax incentives for younger workers.