Young IRS (IRS Jovem)

The Young IRS regime now applies to all taxpayers who are not considered dependents, up to the age of 35. It is applicable for the first 10 years—consecutive or non-consecutive—of earning income from category A (employment) or category B (self-employment).

Excluded from this regime are young individuals who:

• Benefit or have benefited from the Non-Habitual Resident (NHR) regime;
• Benefit or have benefited from the tax incentive for scientific research and innovation, as provided in Article 58-A of the EBF;
• Have opted for taxation under the Regressar program (Article 12-A of the IRS Code);
• Do not have their tax situation regularized.

The exemption on income, up to a limit of €28,737.50 (equivalent to 55 times the value of the IAS: IAS 2025 = €522.5 x 55 = €28,737.50), is as follows:

a) 100% in the 1st year;
b) 75% from the 2nd to the 4th year;
c) 50% from the 5th to the 7th year;
d) 25% from the 8th to the 10th year.

To benefit from this regime, taxpayers must select this option in their IRS declaration for the relevant income year, to be submitted in the following year.

This year, it is possible to benefit from a reduction in withholding tax applied to employment income. To do so, young individuals must request their employer to apply a reduced withholding tax rate under Article 99-F of the IRS Code and indicate the year they started earning income, confirming they are not a dependent.