YOUNG IRS

From 1 January 2025, the IRS Jovem regime in Portugal has been significantly expanded, providing increased tax benefits to young workers. The main changes include increasing the maximum eligibility age to 35, extending the exemption period to 10 years and removing the requirement for specific academic qualifications.

Main Changes:

• Age and Duration: The maximum age to benefit from IRS Jovem was increased from 30 to 35 years, and the duration of the benefit doubled from 5 to 10 years.
• Academic Qualifications : Access to the scheme is no longer dependent on the level of education, making it accessible to all young workers, regardless of their academic qualifications.
• Exemption Limit : The maximum income limit exempt from IRS has increased to approximately €28,700 per year, corresponding to 55 times the value of the Social Support Index (IAS).

Exemption Percentages:

• 1st year : 100% exemption.
• 2nd to 4th year : 75% exemption.
• 5th to 7th year : 50% exemption.
• 8th to 10th grade : 25% exemption.

For example, a young person earning an annual income of €14,000 could save around €800 in tax in the first year of applying the scheme.

Procedures to Benefit:

To benefit from the IRS Jovem, interested parties must indicate this option in their annual income tax return (Model 3) on the Tax Portal, between April and June of the year following the year in which the income was earned. Additionally, it is possible to request the employer to apply the benefit from January, through the reduction of withholding tax.

Exceptions:

Young people who:

• Have enjoyed the non-habitual resident regime.
• Benefit from tax incentives for scientific research and innovation.
• Have opted for taxation under the Regressa program.
• Do not have their tax situation regularized.

These measures aim to support the integration of young people into the job market and encourage them to remain in Portugal, offering significant tax relief during the first years of professional activity.