If you were thinking about moving to Portugal, it just got a whole lot more expensive

• Portugal is ending a hefty tax break for foreigners in 2024 that incentivized many to move there.
• As newcomers arrived in the country during the pandemic, it drove up the cost of living for locals.

Portugal has long ranked high on the list for Americans looking to move abroad because of its affordability.

With its golden visa, favorable tax incentives for foreigners, and low housing costs, it became a major destination for global movers during the pandemic. But come 2024, it will be significantly more expensive to live there if you're coming from another country.

"We already have clients that are looking to reconsider their plans" to move, Alex Ingrim, a private wealth manager at Chase Buchanan, told Insider.

António Costa, the prime minister of Portugal, announced that the country is scrapping its non-habitual resident tax regime (NHR), a popular tool used by foreigners to cut down on expenses. Now those moving to Portugal in 2024 and beyond will have to pay the same amount of income tax as everyone else, Le Monde reported.

NHR was introduced in 2009, after the Global Financial Crisis, to attract foreign talent and wealth to the country. Currently foreigners who are accepted into the program had income taxed at a flat rate of 20%, while retirees had pension taxes at 10%, according to Portugal.com.

"It made Portugal a really attractive jurisdiction to work or to retire," Ingrim said. Foreigners "were also tax exempt on capital gains on property transactions abroad or rental income that was generated abroad, so it had all of these different advantages to it."

Now, "I think it's caused a lot of people to reconsider why they were moving to Portugal if it's not going to be as easy as they first thought," Ingrim said.

Close to 10,000 Americans were living in Portugal in 2022, according to data from the Portuguese government, as reported by The New York Times — an increase of 239% since 2017. As foreign wealth moved into the country, the cost of living skyrocketed. Now, trying to walk back the success of the programs the country put in place to stoke the economy, it's changing one of the biggest points of attraction: the savings.

Those advantages will be wiped away for new foreign residents in 2024. For Portuguese residents, taxes range from 14.5% to 48% depending on what you earn — the highest band is for earners bringing in 75,010 euros (or $79,647) a year or more, according to investment migration firm Global Citizen Solutions.

"You can see that there's a huge difference between having a 10% flat tax on a social security account or potentially paying something like 35%, 45%, 48% on your income in retirement," Ingrim said.

Americans already living in Portugal, like Dan Bagby and his wife, Michelle, who moved to Lisbon from Texas in 2021, won't be immediately affected.

Once accepted, NHR's perks last for 10 years. Bagby is working on Portuguese citizenship and told Insider that once his status changes, his taxes still won't until 2031.

"In the short term, it really doesn't change anything for me," Bagby told Insider. "We've got about seven more years left. I'm not really worried about it right now."

The sudden arrival of Americans and other foreigners pushed the country's real-estate market to new highs. House prices increased 157% from 2020 to 2021, according to Eurostat, the European Union's statistics agency. And rents rose 112% from 2015 to 2021, the Associated Press reported.

In February the country announced an end to its popular "golden visa" program, which allowed investors to obtain residency permits in exchange for purchasing residential real estate worth at least 500,000 euros.

Ending NHR is anticipated to help correct the housing market by making foreign buyers pay their fair share in taxes. But with the cost of living going up and reaching levels of parity with other countries, foreigners may not move to Portugal at all.

"It's causing people to take a step back and go, 'Okay, Portugal was the easy answer and now there's no other easy answer out there. France, Italy or Spain might be back on the table,'" Ingrim said.