IRS Jovem is a tax regime in Portugal that is being used to encourage young people to join the workforce, since Personal Income Tax exemptions are on offer. This incentive is applied to the yearly tax filing notification to the Tax Authority, so that individuals can make use of paying lower tax amounts.
The regime doesn’t apply to everyone, but even it it does it might not be very beneficial. And so, it’s important to consider all parts of this regime to make sure it’s useful before rushing to apply it to your tax return filing.
What is IRS Jovem
The IRS Jovem applies to employment, self-employment from Portuguese or foreign sources, as long as the individual is a tax resident of Portugal. The IRS Jovem does not require any sort of direct enrolment, and is implemented when selecting the appropriate box during your tax filing submission period.
Should individuals be an employee and are aware that the IRS Jovem applies to their situation, either the employee can request an adjustment to their monthly withholding tax contribution, or it’s likely that a refund entitlement will be due based on the programmes tax saving incentives.
Who can benefit
Any Portuguese tax resident under the age of 35 may consider applying for the IRS Jovem. Plus, the following eligibility criteria must be taken into consideration:
- Have a regularised tax situation (so, making sure no tax debts are applicable to your personal situation)
- Have not benefitted from other tax regimes, like the NHR, IFICI or return programme
- Considered independent from a parent and/or guardian (so, if under 25 you must earn the minimum monthly wage of Portugal)
The regime applies for the first 10 years of earning income, provided you remain under the age of 35 during this period. It is also open to any individual, regardless of their educational background or qualifications.
What are the benefits
Personal Income Tax exemptions are provided, should this regime apply to a young persons’ situation. Any income earned in the first 10 years of earning has the following limits:
Earned income years | Exempt income (%) |
|---|---|
1st year | 100% |
2nd to 4th years | 75% |
5th to 7th years | 50% |
8th to 10th years | 25% |
Key considerations
In consideration of the table above, there are exemptions to the income. The Social Support Index (IAS) is set at €537,13 for 2026, and so the maximum exemption for the 2026 tax year is €29,542.15. This means, if an individual who’s eligible for the IRS Jovem has an annual salary of €20k their entire salary will be exempt from Personal Income Tax. Because, it falls under the €29,542.15 limit. However, if an individual is in their 6th year of work with an annual salary of €60k, 50% of their salary (€30k) should be excluded from taxation. However, as we know there’s a cap on this exemption so the maximum amount that can be excluded is €29,542.15. So in this case, only €29,542.15 would be exempt from taxes, not the full €30,000.
What really matters
No matter if the IRS Jovem applies to your situation, what matters is how the income is reported so that your personal tax return is file correctly – so you don’t end up paying more tax than you need to! So if you know the regime applies to you, and your happy to submit it on the tax return then great. If however you’re not entirely sure it applies to you, and how it’s reported, then speak with our team first. We can review your situation against the eligibility criteria, so that hopefully the IRS Jovem applies to you.
If perhaps this regime isn’t of interest to you, then just make sure to file your tax return on time. The tax period in Portugal runs from January to December, and then from 1 April to 30 June of the following year you’ll declare income from the previous tax year.
Making the right decision
Making a determination that the IRS Jovem applies to you, when it doesn’t, can be risky. Because you’ll inevitably submit a tax return thinking that the IRS Jovem applies, and expecting a lower tax bill but following the Tax Authorities review they then apply a higher bill. So then, you might not have set aside enough funds each month to pay the higher tax bill.
