Moving to Portugal with a $75,000 Income? NHR 2.0 Could Cost You Tens of Thousands More in Taxes

For years, Portugal’s Non-Habitual Residency (NHR) program was one of the most generous in Europe. Wealthier Americans eyeing a move abroad saw it as a golden ticket—live in a warm, safe, affordable country and legally sidestep most income taxes for a decade.

But that door has closed. The new NHR 2.0, while branded as a modernization, is nothing short of a tax trap for retirees who don’t plan carefully. And for those whose 10-year NHR window is ending, the party may already be over.

Let’s walk through what this could really cost you—using real numbers.

Three Real-World Examples: What Happens to Your Foreign Income?

Scenario 1: $50,000/year in U.S. Social Security + Pension + Dividends

Under the old NHR, most of this income was tax-exempt in Portugal. Under NHR 2.0? Expect **up to €8,200 in annual taxes**—that’s a **16% hit** you didn’t have before.

Scenario 2: $75,000/year (Average for Affluent U.S. Retirees)

This is the sweet spot for many Americans abroad:

– $30,000 in Social Security – $25,000 in IRA or 401(k) distributions – $20,000 from dividends and capital gains Under old NHR: All of this could be tax-free, depending on sourcing. Under NHR 2.0: You could owe **€12,000–€15,000 per year.**

Over a decade? That’s **€120,000–€150,000 in new taxes** you never planned for.

Scenario 3: $100,000/year in Mixed Foreign Income

Add some trust income, rental income, or brokerage gains, and you’re looking at **€20,000+ per year in tax exposure**, especially after the 10-year window ends.

What About Those Already Under NHR?

If you secured Portugal residency and enrolled in the original NHR before the cutoff, you can still use the full 10-year window—but be warned:

– The clock doesn’t stop, even if you leave Portugal temporarily.

– After your 10 years, you fall into Portugal’s **progressive tax brackets**, which top out at 48%.

– Even modest income levels can cross into the 28.5–37% range for singles.

For couples filing separately (as is typical), both may face individual tax burdens. Portugal does allow **joint taxation**, but unless you structure it carefully, you may pay more than expected.

What’s the Real Risk?

Let’s say you move in under NHR 2.0 expecting to “optimize later.” That’s a gamble.

The Portuguese tax authority is becoming far more aggressive in **defining foreign pensions and trust distributions as taxable income**, regardless of how they’re taxed in the U.S. The U.S.-Portugal tax treaty, while useful, does not fully protect you under these new rules.

Worse, the evolving interpretation of what constitutes a “pension” means that even Roth conversions or distributions from U.S. retirement accounts could be taxed—even if you paid U.S. tax on them already.

The Bottom Line

Portugal is still beautiful. But financially, it’s not the slam-dunk it used to be.

If you’re moving with $75,000 in annual income, you could be looking at €150,000 more in taxes over a decade than those who arrived just a few years ago.

And when the NHR clock runs out? Even more.

— Roy Wealth & Borders

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