The chairperson of the Order of Certified Accountants (OCC), Paula Franco, has emphasized the importance for young individuals to comply with specific steps in the annual IRS declaration that they are currently preparing and submitting. Franco advises rejecting the Automatic IRS option and instead completing the declaration manually.
To take advantage of the IRS Jovem model, in effect until 2024, meeting the age and education-related requirements is not sufficient. Paula Franco explained that it is also necessary to indicate in the annual IRS declaration the intention to be taxed under this regime by marking boxes 4 A and 4 F of annex A (for dependent labor income) or 3 E of annex B (for self-employed income).
This explicit choice is crucial for the Tax Authority (AT) to calculate the tax based on the exemptions provided by the IRS Jovem. This becomes even more important if the employee has requested their employer to apply withholding at source under this regime.
If this option is not expressed and withholding has been applied, the tax will be calculated by the AT according to the standard IRS rules (without the IRS Jovem exemption) and the taxpayer will be required to “pay the full amount of the tax,” warns the chair of the OCC.
The annual IRS declaration, which started on April 1 and continues until June 30, covers the income obtained throughout the previous year and considers the IRS Jovem rules then in effect, not those implemented in January 2025.
Within the current tax declaration period, individuals aged between 18 and 26 who have completed their study cycle (undergraduate or master’s degree), or up to 30 years old if they have completed a doctorate, can opt for the IRS Jovem regime.
This IRS Jovem scheme is designed to last five years, offering a tax exemption on 100% of income in the first year, capped at 20,370.40 euros (40 times the Social Support Index), 75% in the second year, with a limit of 15,277.80 euros (30 times the IAS), 50% in the third and fourth years, each with a limit of 10,185.20 euros (20 times the IAS), and 25% in the fifth year, up to 5,092.60 euros (10 times the IAS).
The new IRS Jovem regime that became effective in January, and which eligible individuals can apply for in the annual tax declaration to be submitted between April and June 2026, extends to all individuals up to 35 years of age, regardless of their education cycle.
To benefit from this tax exemption, which has a maximum duration of 10 years, young people simply need to be under 35 years old and have 10 years of work, submitting an IRS declaration independently.
The percentage of exempt income decreases over the 10 years, but the limit is higher, going up to 55 IAS, which in 2025 corresponds to 28,737.50 euros.
In this model, as in the previous one, the effects of the IRS Jovem can be immediately ‘felt’ in withholding taxes if the worker requests this option to the employer. Additionally, young people can choose to have the usual withholding and reclaim any excess tax paid at the time of refund.
