The Portuguese government, led by Prime Minister Luís Montenegro, has approved a measure to reduce the maximum IRS (personal income tax) rate for young people under the age of 35 to 15%. This measure will come into effect on January 1, 2025, and is expected to benefit over 1 million young workers.
The new IRS Jovem (Youth IRS) scheme will apply to all workers up to the 8th tax bracket, which corresponds to an annual gross income of up to €81,199. This means that young people earning up to €6,000 per month will see a significant reduction in their tax burden.
The government estimates that the average young person will save between €4.40 and €15.00 per month on their IRS payments. For example, a young person earning a gross salary of €1,000 per month will save €941 per year, while a young person earning €1,500 per month will save almost €2,000 per year.
The IRS Jovem scheme is expected to cost the Portuguese government €1 billion in lost tax revenue. However, the government believes that the economic benefits of the scheme will outweigh the costs, as it will encourage young people to work and invest in Portugal.
The IRS Jovem scheme is a welcome development for young people in Portugal, who are often struggling to make ends meet due to the high cost of living. The scheme will provide much-needed financial relief to young workers and help them to save for the future.
Key Points:
- The maximum IRS rate for young people under 35 will be reduced to 15%.
- The scheme will apply to all workers up to the 8th tax bracket.
- The average young person is expected to save between €4.40 and €15.00 per month on their IRS payments.
- The scheme is expected to cost the government €1 billion in lost tax revenue.
Additional Notes:
- The IRS Jovem scheme is similar to schemes that have been implemented in other countries, such as France and Italy.
- The scheme is expected to be particularly beneficial for young people who are starting their careers.
- The government is also considering other measures to help young people, such as increasing access to affordable housing and childcare.