The IRS Jovem is a tax relief regime that offers full or partial exemption from taxes on work-related income, both dependent and independent. What are the specific benefits?
In a social media post, the Tax Authority (AT) describes the IRS Jovem as a “more favorable tax regime for income from dependent work (category A) or independent (category B) for individuals up to 35 years old.”
“The regime applies starting in 2025 for a maximum period of 10 years from the year the young person first earned income from work (while not being a dependent family member), even if that year occurred before 2025,” explains the tax authority.
Who is eligible to benefit?
- Individuals up to 35 years of age (as of December 31 of the relevant tax year);
- Not considered dependents in a family aggregate;
- Have received income from dependent work (category A) or professional or business (category B).
What are the benefits?
According to the AT, there will be an exemption of income corresponding to:
- 100% of income in the 1st year of income;
- 75% in the 2nd, 3rd, and 4th year of income;
- 50% in the 5th, 6th, and 7th year of income;
- 25% in the 8th, 9th, and 10th year of income.
There is, however, an income limit: “The exempt income is limited to 55 times the IAS (Social Support Index), which amounts to €28,737.50 for 2025.”
The tax authority states, “It is not applicable to taxpayers who benefit or have benefitted from the Non-Habitual Resident (NHR) regime or the new Fiscal Incentive for Scientific Research and Innovation (IFICI); have opted for the tax regime for ex-residents; or do not have their tax situation regularized.”
IRS Jovem began in 2025 with new rules, reaching more individuals and doubling the period for benefit usage, though questions remain, especially regarding withholding tax.
How are the working years counted?
To calculate the 10 years of eligibility, the years during which the young person worked and filed an IRS declaration independently are considered. This means that a young person who started working in 2023 but continued to file IRS as a dependent (possible when annual earnings are up to 14 times the minimum wage) can start 2025 as being in their first year of work and enjoy a 100% exemption.
Does the exemption begin at source withholding or only with the IRS submission?
Youths can experience the benefit as soon as their salary is paid by asking their employer to reduce withholding. If this request is not made, the benefit will be accounted for during the filing of the annual IRS declaration, where it is necessary to indicate that one intends to benefit as per article 12.º B of the IRS Code.
