Portugal’s government has disclosed that its youth income tax relief scheme cost the state €734 million in 2025, according to a fiscal expenditure report submitted to parliament.
The figure underscores the significant budgetary impact of targeted tax incentives designed to support younger workers and graduates.
The report, accessed by Observador, indicates that while the youth tax break was heavily utilized, other incentives such as those aimed at salary increases saw limited uptake.
This disparity suggests that structural tax measures may be more effective than temporary wage-related incentives in the current economic climate.
The disclosure comes as Portugal continues to navigate fiscal consolidation targets set by the European Union.
The high cost of the youth tax relief raises questions about the sustainability of such measures in the medium term, particularly if revenue growth slows or if other social spending pressures increase.