New model for the Youth IRS in 2025

The 2025 State Budget introduced a new Personal Income Tax (IRS) model for young people. IRS Jovem is a benefit that reduces the tax paid on labour income.

As of 1 January 2025, this model brings changes to the age of beneficiaries and the duration of the benefit, among others.

What's new in the Youth IRS

• The age limit is raised from 30 to 35
• The maximum duration of the benefit will be 10 years
• Access to the IRS Jovem no longer depends on educational level
• The exemption limit increases by around 8,000 euros, from 40 IAS (Social Support Index) to 55 IAS.

The IRS exemption for young people is capped at 55 times the value of the IAS, i.e. 28,737.50 euros in 2025:

• 100% in the 1st year of earning income
• 75% from the 2nd to the 4th year
• 50% from the 5th to the 7th year
• 25% from the 8th to the 10th year.

The 10-year period begins in the first year in which the young person earns income from categories A and B as a non-dependent.

How to benefit from IRS Jovem

In order to take advantage of the IRS Jovem scheme, you must indicate to your employer that you wish to benefit from Article 12-B of the IRS Code in your annual tax return (Declaração Modelo 3), submitted via the Finance Portal between April and June of the following year.

You can ask for the IRS Jovem to be accounted for monthly in your salary, starting in January, by reducing the withholding tax. To do this, you must ask your employer to apply for the benefit, under Article 99-F of the IRS Code, and indicate the year in which you started earning income from categories A or B, not being dependent. 

The employer then has to apply the withholding tax rate that would be due for all income, including exempt income, only to the part of the income that is not exempt, depending on the year to which the exemption refers.

Exceptions to the IRS Joven benefit

The rules of this benefit do not apply to young people who:

• benefit or have benefited from the non-habitual resident regime
• benefit or have benefited from the tax incentive for scientific research and innovation
• have opted for taxation under the terms of article 12-A of the IRS Code (Return Programme)
• their tax situation has not been regularised.

Read more about how to request IRS Jovem.

Source: Government Portal