No, young Portuguese workers are not experiencing increased taxes to fund government pensions. In fact, the Portuguese government has implemented significant tax relief measures for young professionals to address demographic challenges and economic concerns.
Tax Relief for Young Workers: Starting in 2025, Portugal introduced a decade-long tax incentive program for individuals aged 18 to 35. Under this scheme, young workers earning up to €28,000 annually receive a 100% income tax exemption in their first year of employment. This exemption gradually decreases over the next nine years: 75% for years 2–4, 50% for years 5–7, and 25% for years 8–10
Objective: The initiative aims to combat the "brain drain" phenomenon, where a significant portion of the young workforce emigrates in search of better opportunities. Approximately 30% of Portuguese individuals aged 15 to 39 have lived abroad at some point, leading to concerns about the country's demographic and economic future .
Funding Pensions: While Portugal's pension system operates on a pay-as-you-go basis—where current workers' contributions fund current retirees—there's no evidence that young workers are bearing an increased tax burden for this purpose. Instead, the government is investing in retaining and attracting young talent through tax incentives, even as it navigates the challenges of an aging population and pension sustainability.
In summary, rather than increasing taxes on young workers to fund pensions, Portugal is actively reducing their tax burden to encourage them to remain in the country and contribute to its economic vitality.