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Portuguese Budget for 2025

The Portuguese Budget for 2025 was presented in parliament with three main objectives: strengthening family incomes, promoting investment, and protecting the future of the next generations.

Highlights

  • Increase in minimum wage to €870

  • IAS 2025 = €522.50

  • Minimum Subsistence Level

  • Increase in age and application of Young IRS

  • Reduction in nominal Corporate Tax rate

In this article, you will learn the main changes already approved for next year, broken down by tax type.


Portuguese Budget 2025 Highlights



IRS

Increase in Minimum Wage
The new State Budget for 2025 includes an increase in the Guaranteed Minimum Monthly Remuneration to €870, representing a €50 increase compared to 2024.

Minimum Subsistence Level
The minimum subsistence level will increase to €12,180 (€11,480 in 2024) per taxpayer or double that for married taxpayers. Taxpayers earning up to this amount will be exempt from paying IRS.

Productivity Bonuses, Performance, Profit Sharing, and Balance Sheet Bonuses
IRS exemption applies up to 6% of the worker's annual base salary, covering workers and statutory body members (e.g., managers). The exemption requires a minimum annual base salary increase of 4.7%, per Article 19-B of the EBF.

Meal Allowance
The legal limit for meal allowances paid via meal cards increases to €10.20 (from €9.60).

Young IRS
This regime now applies to individuals up to 35 years old (previously up to 26). The duration increases from 5 years to 10 after completing studies.

Exemptions:

  • 100% in the first year

  • 75% for the 2nd and 4th years

  • 50% for the 5th to 7th years

  • 25% for the 8th to 10th years

Exemption limit: 55 times the IAS (€28,737.50).

Deductions
The IRS category A specific deduction increases to €4,462.15 (8.54 times the IAS). This also applies to pension income (category H).

Source Withholding Tax
The supplementary work withholding rate is now 50% of the monthly dependent work rate in the payment month (previously applied after the 101st hour of supplementary work).

IRC

Nominal Corporate Tax Rate
The nominal rate decreases to 20% (from 21%) for entities mainly engaged in commercial, industrial, or agricultural activities.

For SMEs, the rate on the first €50,000 of taxable income drops to 16% (from 17%).

Social Utility Realizations
A 20% increase applies to expenses on employee health insurance, per Article 43 of the CIRC.

Autonomous Taxation Rates
Rates for passenger vehicles decrease by 0.5%, with updated acquisition thresholds:

  • Below €37,500 = 8%

  • €37,500–€45,000 = 25%

  • €45,000 and above = 32%

The additional 10% rate in case of fiscal loss is waived under specific conditions.




TAX BENEFITS

Salary Increases
The deduction rate for salary increases rises from 150% to 200% under certain conditions (e.g., minimum 4.7% annual base salary increase).

Madeira Free Trade Zone
The reduced 5% IRC rate for entities in the Madeira Free Trade Zone is extended until December 31, 2026.



VAT

Bicycles
VAT deduction is now allowed on expenses related to bicycles with or without motors.



Stamp Duty

Exemptions for renegotiated home loans and capitalized deferred amounts continue until December 31.


Property Transfer Tax (IMT)

A 2.3% adjustment applies to acquisition tables for main residence, youth IMT, and housing.





Ruben Berenguer