What changes in taxes in 2025?
By 2025, the Government decided to keep the rates of most taxes unchanged, while at the local level, it increased the number of municipalities applying the minimum IMI rate or making small reductions compared to the value in 2024.
These are the main tax changes for 2025.
Discover the main tax changes in 2025, with impact on your income, disclosed by the Notícias ao Minuto.
IRS: Changes to increase net income in 2025
The tax on individuals' income will undergo various changes effective January 2025, resulting in an increase in net income both in January and at the time of the annual tax return submission.
Among the changes are:
- The update of the bracket limits by 4.6%.
- The increase of the exempt value for income tax (minimum existence) to 12,180 euros, following the rise of the National Minimum Wage (NMW).
- Increase in specific deduction to 4,462.15 euros.
- The increase in the deduction limit for rental income, which is increasing from 600 to 700 euros.
The new Young IRS model also comes into force in January, being more comprehensive and advantageous than the previous one. This regime will be valid for 10 years (up to 35 years old) and applies to gross annual income up to 55 times the Indexante dos Apoios Sociais (IAS). Despite the improvements, critics of the measure say it will not be enough to prevent young people from leaving the country.
In addition, in 2025:
- Independent workers (freelancers) will have a reduction in the withholding tax rate, which will decrease from 25% to 23%.
- All taxpayers can allocate up to 1% of their IRS to cultural, youth, or sports entities.
Read more about the Young IRS: How does the new Young IRS regime work?
Meal allowance: New exempt limits for 2025.
Within the scope of IRS, the value of the meal allowance exempt from tax and contributions, when paid in card or vouchers, increases to 10.20 euros (plus 60 cents). For amounts paid in cash, the exemption limit remains at six euros.
IMT: Updating the tax brackets in line with IRS.
Just like in the IRS, the exempt thresholds and values subject to marginal rates of IMT will be updated by 4.6%, also applying to the IMT Young model.
IMI: More municipalities opt for the minimum tax
More than half of the municipalities will apply the minimum rate of 0.3% of property tax in 2025 (for the 2024 tax). Among the municipalities that decided on this rate are Lisbon, Oeiras, Sintra, Albufeira, and Faro.
Most municipalities will continue to offer discounts on property tax to families with dependents.
Read also: IMI: Learn all about this tax
ISP: Adjustment in the composition of the fuel tax
The unit rates of the ISP (Tax on Petroleum Products) on a liter of gasoline and diesel will increase by about three cents in January, offsetting the decrease in the carbon tax by an equal amount. The government guarantees that the total value of the ISP supported by consumers will not be changed, only the composition of the tax will be adjusted.
The aim is to gradually remove the extraordinary measures implemented in 2022 and 2023 to mitigate the rise in fuel prices, in accordance with the demands of the European Commission.
Car taxation: New rules and reduction in the ISV.
Starting from 2025, the ISV (Vehicle Tax) discount tables for imported used cars will be unified. Instead of separate tables for engine displacement and CO2 emissions, there will be a single table for the entire tax. As a result, the ISV will decrease overall, especially for vehicles with higher emissions.
Additionally:
- There will be no update on the rates of the IUC (Single Circulation Tax).
- The autonomous taxation rates on vehicles of companies and individual entrepreneurs will also be reduced.
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