IRS Jovem: What Is It and How Does It Work?

When Does the New IRS Jovem Take Effect?
The new IRS Jovem framework came into force with the 2025 State Budget on January 1, 2025.

What Changes With the New IRS Jovem?
The revamped IRS Jovem introduces four key updates:

1. Increased Age Limit: The maximum age rises from 30 to 35 years.
2. Extended Benefit Duration: The maximum duration doubles from 5 to 10 years.
3. No Educational Qualification Requirement: Access is no longer tied to educational attainment.
4. Higher Exemption Limit: The tax-free income limit increases by approximately €8,000, from 40 IAS (Social Support Index) to 55 IAS.

What Is IRS Jovem?
IRS Jovem is a tax relief scheme aimed at young individuals up to 35 years old, regardless of their education level. It offers a reduction in personal income tax (IRS) on earnings from work, valid for a maximum of 10 years through partial exemptions.

This exemption applies to earnings up to 55 times the value of the IAS—approximately €28,700—and is structured as follows:

• 100% Exemption in the first year of income generation;
• 75% Exemption from the 2nd to the 4th year;
• 50% Exemption from the 5th to the 7th year;
• 25% Exemption from the 8th to the 10th year.

The 10-year period begins in the first year a young person files IRS as an independent taxpayer and includes subsequent years where income from categories A (employment) or B (self-employment) is earned. Years without income from these categories do not count towards the 10-year limit.

How Much Can Young People Save?
A young professional earning €1,000 per month (€14,000 annually) could save approximately €800 in taxes in their first year. Over 10 years, the total savings could exceed €7,200—nearly €3,500 more than under the previous IRS Jovem regime, which was in effect until 2024.

Are There Any Exceptions?
Certain individuals are ineligible for the IRS Jovem exemption:

• Those benefiting or who have benefited from the Non-Habitual Resident (NHR) regime;
• Those who have utilized the scientific research and innovation tax incentive under Article 58-A of the Tax Benefits Statute;
• Individuals opting for taxation under Article 12-A of the IRS Code (Repatriation Program);
• Individuals with irregular tax status.

How to Apply for the IRS Jovem Benefit
To take advantage of this scheme, young taxpayers must indicate their intent to benefit from Article 12-B of the IRS Code in their annual income tax return (Modelo 3), submitted via the Finanças portal between April and June of the following year.

Alternatively, taxpayers can request monthly reductions in withholding tax starting in January. To do so, they must inform their employer about their eligibility under Article 99-F of the IRS Code and provide the year they began earning taxable income as an independent taxpayer.

Employers will then calculate withholding taxes based only on the portion of income not covered by the exemption, ensuring immediate tax savings.

Tags: IRS Jovem, taxes, youth, Portugal
Categories: Youth and Modernization

This updated IRS Jovem regime underscores Portugal’s commitment to supporting young workers and fostering financial independence. Take advantage of these changes to maximize your tax savings!