Parliament Forces Portugal to Pay Its Stalled Graduate Tuition Refund and Stack It With IRS Jovem, Defying the Government's Deficit Warning

Portugal's parliament has moved to rescue a graduate perk that exists on paper but has largely gone unpaid — and, in the process, picked a fight with the government over the cost. On 2 July 2026 the Assembleia da República (Assembly of the Republic) approved, in general terms, a Partido Socialista (Socialist Party, PS) bill that forces the State to actually pay the "prémio salarial de qualificações" (qualifications salary premium) — the scheme that refunds university tuition to young graduates — and, more contentiously, allows it to be combined with the IRS Jovem youth income-tax break rather than forcing graduates to choose between the two.

The bill cleared its first hurdle with an unusual alliance: PS votes joined by Chega, against the wishes of the governing Aliança Democrática (Democratic Alliance, AD). The PSD and its CDS-PP partner voted no, as did the liberal IL, while the communist PCP abstained. Because it passed only "na generalidade" (in general terms), the text now heads to committee for a detailed, article-by-article vote before any final approval — but the political signal is already sent.

What the tuition refund actually is

The prémio salarial de qualificações was created by decree-law in 2023, under the previous António Costa government, as a way to reward young workers for finishing higher education and to encourage qualified graduates to stay and work in Portugal. It lets workers up to the year they turn 35 ask the Autoridade Tributária e Aduaneira (Tax and Customs Authority, AT) to hand back what they paid in propinas — the annual tuition fees Portuguese public universities charge.

The amounts are modest but not trivial. A licenciatura (bachelor's degree) is worth €697 a year, and a mestrado (master's) €1,500 a year, each paid for the number of years equal to the length of the degree cycle. For an integrated master's, the years counting as the bachelor's stage earn €697 and the master's stage €1,500. To claim it, the AT is supposed to publish an electronic form every year by 1 March and keep it open for at least three months.

The catch: the form that never appeared

The reason PS pushed a law is that the scheme has, in practice, stalled. According to the Socialists, the electronic form legally required to apply for the 2025 and 2026 reference years was never made available, leaving "thousands of potential beneficiaries" unable to collect a benefit they are entitled to. Turning the payment obligation into a law passed by parliament — rather than leaving it to a decree the government can slow-walk — is designed to remove the executive's discretion to simply not open the channel.

The second change is about stacking. The government's position had been that a young graduate should pick one benefit or the other — either the tuition refund or the far larger IRS Jovem regime, which sharply reduces income tax in the first years of a career. The PS bill writes into law that "o prémio salarial de qualificações é cumulável com o regime" — that the premium can be drawn at the same time as IRS Jovem, so a graduate no longer has to trade one away.

The deficit fight

The AD reacted sharply. PSD vice-president Hugo Carneiro put the price tag at "pelo menos 300 milhões de euros" — at least €300 million a year — and accused PS and Chega of "irresponsabilidade orçamental" (budgetary irresponsibility), warning the measure could tip the accounts toward deficit and constrain the negotiation of the 2027 State Budget. It is a familiar 2026 dynamic: a minority AD government watching an opposition majority approve spending it says it cannot afford.

The clash also feeds a wider argument about how much revenue Portugal quietly gives away. The country's tax breaks recently swelled to €21 billion in 2025, an amount the Court of Auditors says escapes real scrutiny — and stacking the graduate premium on top of IRS Jovem adds one more layer to a tower of youth incentives whose combined cost is hard to see.

Why graduates are a political prize

Behind the numbers is Portugal's long anxiety about losing its young and educated to higher wages abroad. IRS Jovem, the tuition refund and related perks are all bets that cutting the tax and cost of early-career life will keep graduates at home — even as the labour market runs hot, with unemployment at its lowest since 2001. For internationally mobile professionals weighing Portugal, the growing stack of youth tax reliefs is part of the calculation; our guide to the Portuguese employment contract and payslip sets out where these deductions land on take-home pay.

What This Means for Expats

• It is not law yet: Parliament approved the bill only in general terms on 2 July. It still needs a committee vote and a final reading before anything changes, and the government opposes it — so treat the stacking with IRS Jovem as likely-but-not-final.
• Who can claim the refund: The prémio targets workers up to the year they turn 35 who completed a Portuguese higher-education degree and paid propinas. It is claimed from the AT, not from an employer.
• The sums are per year of study: €697 a year for a bachelor's and €1,500 for a master's, paid across as many years as the degree took — meaningful for a recent graduate, but not a windfall.
• Watch the 1 March form: The refund is claimed through an electronic form the Tax Authority is meant to open by 1 March each year. Its absence is exactly why this bill exists; if you qualify, check the Portal das Finanças when the window is due.
• The bigger signal is fiscal: A €300 million measure passed against the government points to a tense run-up to the 2027 budget — worth watching for anyone tracking Portugal's tax and spending direction.