Lisbon, Oct. 10, 2024 (Lusa) - According to the 2025 budget proposal submitted to parliament on Thursday, the youth income tax will be extended to 10 years, and the amount of exempt income will be increased at an estimated cost of €525 million.
According to the budget proposal, workers (employees or self-employed) up to the age of 35 benefit from a discount on their personal income tax (IRS) consisting of an exemption on 100% of their income, with a limit of 55 Social Support Index (IAS) in the first year.
From the 2nd to the 4th year, the exemption is 75% of income, from the 5th to the 7th year, 50%, and from the 8th to the 10th year, 25%. Throughout this period, the income limit that can benefit from the exemption remains at 55 IAS (around €28,000 annual taxable income).
Currently, the IRS Jovem provides for a total or partial exemption from personal income tax for the first five years of employment, lowering the exempt income limit over the measure's horizon.
The model now included in the 2025 budget puts the income limit that can benefit from the measure at 55 IAS, roughly equivalent to up to the 6th taxable income bracket (around €28,000).
According to the report accompanying the budget bill, extending this measure to younger workers will cost €525 million, with the document noting that the model in force this year will cost €250 million.
The figure (€525 million) corresponds to around half the estimated cost of the measure initially designed by the government. This measure consisted not of exempting part of the income from tax but of reducing the IRS rates applicable to workers up to 35 to around a third of those applied to other workers.
Today, the government submitted the 2025 budget proposal to parliament, which predicts that the economy will grow by 1.8% in 2024 and 2.1% in 2025 and a surplus of 0.4% of the Gross Domestic Product (GDP) this year and 0.3% next year.
The proposal has not been approved in general, and the vote is scheduled for the 31st in parliament.
If the PSD/CDS government's budget proposal is approved in general with the PS abstention or, alternatively, with the favourable votes of the Chega, it will then be examined in a special session in parliament between 22 and 29 November. The final overall vote on the budget is scheduled for 29 November.
LT/ADB // ADB.
Lusa
