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IRS Jovem: Tax incentive for young professionals

27/01/2025

What is IRS Jovem?

IRS Jovem is a Portuguese tax regime that aims to encourage young people to enter the labour market by granting Personal Income Tax (PIT) exemptions on employment or self-employment income (PIT categories A and B), from Portuguese or foreign sources, earned by taxpayers resident in Portugal.

This regime is available to all taxpayers up to the age of 35 and is applicable for the first 10 years of earning income, regardless of the cycle of studies they have completed or when they completed it.

According to information released by the Tax and Customs Authority, the first year of income corresponds to the first year in which the taxpayer works in Portugal. In other words, if a young person has already worked outside of Portugal, this labour history will not count for purposes of the IRS Jovem regime.

Who can benefit from the IRS Jovem regime?

Any taxpayer under the age of 35, provided that:

  • They are not considered a dependent within their parents’ household (i.e. they are over 25 or, if under 25, earn more than the guaranteed minimum monthly wage, which in 2025 is set at €870.00/month, €12,180.00 per year);

  • Have not benefited from other special tax regimes, such as the Non-Habitual Resident (NHR), the Tax Incentive for Scientific Research and Innovation (IFICI) or the Return Programme; and

  • Have their tax situation regularised (essentially, that they have no tax debts).

    • What are the benefits of the IRS Jovem regime?

    The benefits consist of a PIT exemption, calculated on income earned in the first 10 years of activity, with the following limits:

    Without prejudice to these percentages, the maximum exemption ceiling on the income covered each year is 55 times the value of the Social Support Index (IAS). As the IAS is set at €522.50 for 2025, the maximum exemption ceiling for the 2025 tax year is€ 28,737.50

  • Example 1: If a person under the age of 35 starts working in 2025 and has an annual salary of €20,000.00, opting for the IRS Jovem regime, their entire annual salary will be exempt from PIT because it falls below the ceiling of €28,737.50.

  • Example 2: If, in 2025, a person under the age of 35 is in their 3rd year of work and has an annual salary of €40,00.00, by opting for the IRS Jovem regime, 75% of their salary could be excluded from taxation, i.e. €30,000.00. However, as the maximum exemption ceiling is 55 times the IAS, €28,737.50 in 2025, this will be the exemption ceiling in this case, meaning that €11,262.50 (= €40,000.00 – €28,737.50) will be subject to PIT.

    • It is important to note that the exempt part of the income is aggregated to determine the rate to be applied to the remaining income taxable at the progressive PIT rates, thus guaranteeing the progressivity of the tax. In other words, if the young worker sells a property, the exempt part of the salary is added to the non-exempt part and also to the real estate capital gain to determine the progressive rate applicable to the non-exempt part of the salary and the real estate capital gain).

    How is the IRS Jovem regime implemented?

    The IRS Jovem regime does not require enrolment and is directly implemented by means of an option when submitting the tax return each year during the exemption period.

    Taxpayers who qualify for the regime can request their employer to adjust the monthly withholding tax to their reality. If this adjustment is not made, the taxpayer will always be entitled to a refund of the excess PIT withheld when their tax return is settled.

    Final Take-aways

    The IRS Jovem regime is an opportunity for taxpayers under 35 to optimise their tax burden and maximise their net income.

    https://belim.pt/en/news-articles/news/irs-jovem-tax-incentive-for-young-professionals/

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