Portugal's minority government approved a significant income tax reduction for more than 300,000 citizens aged 18-35, reducing the average tax rate by two-thirds starting next year to curb youth emigration.

Prime Minister Luís Montenegro stated that "the overwhelming majority will pay between 4.4% and 7%-8%," with the maximum tax rate for young people earning up to €5,800 per month capped at 15%. Currently, income tax rates range from 13% to 48% across all salary brackets.

The measure needs parliamentary approval, where the center-right coalition, which came to power after the March 10 elections, lacks a majority. However, most opposition parties are advocating for such tax cuts, which will facilitate the measure's approval.

"We are giving more hope to young Portuguese to stay in Portugal. We need them here... it is possible to reverse the emigration trend that has unfortunately worsened in recent years," the Prime Minister emphasized in a press conference.

He added that this tax reduction will cost the state treasury approximately €1 billion annually.

According to the Migration Observatory, around 850,000 young people, or 30% of citizens aged 15 to 39, have left the country—a relatively poor one in Western Europe—for some period and live abroad due to poor working conditions and low wages.

The government will also provide young people with a public guarantee covering up to 15% of housing loans worth up to €450,000, as many lack sufficient savings for the initial payments required by banks, and will exempt them from municipal taxes.

Additionally, the government had announced income tax cuts for the middle class amounting to €1.5 billion compared to 2023 levels.