Minimum Wage Increase
As of January 1, 2025, the monthly minimum wage in Portugal has been raised as follows:
- Mainland: Increased to €870.00
- Azores: Increased to €913.50
- Madeira: Increased to €915.00
These adjustments aim to better reflect the cost of living across Portugal's regions.
Update to the Social Support Index (IAS)
The Indexante dos Apoios Sociais (IAS), which serves as a reference for various social benefits, has been updated from €509.26 to €522.50. This change results in a mandatory minimum Social Security contribution of €181.57, representing a €4.60 increase compared to the previous amount.
Adjustment to Tax-Exempt Meal Allowances
The tax-free daily meal allowance for employees paid via cards has been raised from €9.60 to €10.20. Employers have the discretion to implement this change.
Tax Benefits for Young Professionals
To address the issue of youth emigration, the Portuguese government has significantly expanded the "IRS Jovem" program:
- Duration: Extended from five to ten years.
- Eligibility: Now available to all individuals under 35, regardless of academic qualifications.
- Income Threshold: Annual income up to approximately €28,000 qualifies.
- Tax Exemptions:
- 100% in the first year of employment.
- 75% for years 2–4.
- 50% for years 5–7.
- 25% for years 8–10.
These measures aim to provide financial relief for young professionals and encourage them to remain in Portugal.
Adjustment of Tax Brackets
Portugal’s nine taxable income brackets have been increased by 4.6% to ensure that salary adjustments due to inflation do not push employees into higher tax brackets.
Increase in the Specific Deduction
The specific deduction has been recalculated and now corresponds to 8.54 times the IAS, amounting to approximately €4,462.35 for 2025. This reduces taxable income and offers financial relief to both employees and retirees.
These comprehensive reforms highlight the Portuguese government’s commitment to economic stability, inflation control, and retaining skilled young professionals in the country.
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