"There is no young person who will be worse off than they are today because those who are already benefiting from the youth IRS today, from January onwards, can choose whether they prefer the regime they already have or whether they prefer to opt for the regime that we will apply from 01 January 2025", said the Minister of Youth and Modernisation, Margarida Balseiro Lopes.

The minister was speaking at the end of today's meeting of the Council of Ministers, which took place in Braga, and where several measures aimed at young people were approved.

The regime approved today by the Government is aimed at employment income (categories A and B) of young people up to 35 years of age that does not exceed 81,199 euros in annual taxable income, and differs from the previous one in that, instead of granting an exemption, it reduces the IRS rates applicable to one third of the value of those currently applied to the first eight tax brackets.

Thus, and as explained by the Prime Minister, Luís Montenegro, who also participated in the Council of Ministers' 'briefing', young people up to 35 years of age will now pay an IRS rate between 4.4% and 15% - this being the maximum rate applicable to those with income at the level of the aforementioned 8th bracket.

To this end, said the minister, there will be a table "with the new rates that represent one third of the general rates that are currently in article 68 of the IRS code".

This model differs from the previous one in that there is a tax benefit for young people who have just completed their studies and which translates into an IRS discount, with a 100% exemption from income expected, up to a maximum amount of 40 times the social support index (IAS), in the first year of the measure.

In the second year, the exemption covers 75% of income, in the third and fourth years it is 50%, and 25% in the fifth and last year of the benefit - with the reduction in the exemption being accompanied by a decrease in the maximum annual income limit.

The Youth IRS advocated by the Government led by Luís Montenegro has a cost of one billion euros over the term of the legislature.

The Youth IRS measure approved by the previous Government and in force in the State Budget for 2024 will have a cost of around 200 million euros in 2024.

Read Also: Youth IRS approved with a maximum rate of up to 15% for higher incomes (Portuguese version)