IRS Jovem in Portugal: The Tax Break for Workers Up to 35
Young workers in Portugal can keep most of their first years of salary free of income tax. The catch is in the details: the cap, the counting of years and who is shut out.
IRS Jovem is a partial income tax exemption for workers aged 35 or under who are not claimed as dependants. It covers employment and self-employment income for the first 10 years of earnings: 100% in year one, then 75%, 50% and 25%, capped at 55 times the IAS social index, which is €29,542.15 for 2026 income.
The rule is article 12-B of the IRS Code (Código do IRS), rewritten by the 2025 State Budget law, Law 45-A/2024. It is claimed in the annual tax return on the Portal das Finanças, and a reduced withholding can be asked from the employer during the year. Figures below are as of November 2026; for your own situation, check with a certified accountant (contabilista certificado).
How much income does IRS Jovem exempt?
The share of income that is exempt drops as you go through the 10 years, and the exempt amount can never exceed 55 times the IAS (Indexante dos Apoios Sociais) for the year.
| Year of earning income | Exempt share |
|---|---|
| 1st year | 100% |
| 2nd to 4th year | 75% |
| 5th to 7th year | 50% |
| 8th to 10th year | 25% |
The cap moves with the IAS. For 2025 income the tax authority gave it as €28,737.50 (55 × €522.50). The IAS for 2026 is €537.13 under Ordinance 480-A/2025/1, which puts the cap for 2026 income at €29,542.15.
Exempt income still counts when the tax rate on the rest of your income is worked out (englobamento). In practice, a worker whose pay is above the cap pays tax on the excess at a rate that reflects the full income.
Who qualifies for IRS Jovem?
Three conditions are checked each year, according to a binding ruling from the tax authority (AT) in February 2025:
- you are 35 or younger on 31 December of the tax year;
- you earn employment income (category A) or self-employment income (category B);
- you file as a taxpayer in your own right, not as a dependant in your parents’ household.
Since 2025 there is no requirement to have finished a degree or other course, and income levels do not matter apart from the cap. Freelancers on recibos verdes qualify for their category B income.
Who is excluded?
Article 12-B(9) rules out four groups. The benefit does not apply to taxpayers who:
- benefit or have benefited from the non-habitual resident regime (NHR);
- benefit or have benefited from IFICI, the incentive that replaced NHR (see our guide to the IFICI tax regime);
- opted for the tax regime for former residents returning to Portugal, under article 12-A;
- do not have their tax situation in order, for example unpaid tax debts.
Newcomers therefore have to choose. A young foreign hire who qualifies for IFICI and uses it cannot later switch to IRS Jovem, and the reverse also applies.
How are the 10 years counted?
The count starts in the first year you earned work income as an independent taxpayer, even if that year was before 2025. The AT confirmed this reading in a binding ruling of February 2025, so someone who started work in their early twenties may already be in the 50% or 25% band.
- Years with no category A or B income do not count, and the benefit picks up again later until 10 years of use are reached.
- Years in which you were declared as a dependant in your parents’ return are not counted.
- The age limit always wins: there is no exemption for a year in which you are 36 or older on 31 December, even if years remain.
The law does not mention nationality. How years of work earned abroad, before you became tax resident in Portugal, fit into the count is a question to put to Finanças or an accountant before you rely on a given rate.
How do I claim it?
The exemption is an option you tick each year in the IRS return (Modelo 3), filed between April and June on the Portal das Finanças. You can also lower the monthly tax taken from your salary.
- Tell your employer in writing that you qualify for IRS Jovem and state the first year in which you earned work income, so that payroll applies the reduced withholding under article 99-F of the IRS Code. The AT explained this route in its January 2025 newsletter.
- Check your payslip: withholding should apply only to the part of your pay that is not exempt.
- When you file the return the following spring, choose the IRS Jovem option and check the years and amounts the portal shows. The AT is required to flag possible eligibility in the automatic and pre-filled returns.
- Keep proof of your first year of work income in case Finanças asks.
Our guide to the annual IRS return covers deadlines and the automatic return. The legal text is on the Portal das Finanças page for article 12-B of the IRS Code.
Bottom line
The 100% year is a calendar year of income, so a first job that starts in November uses it up on two months of pay. Check where you are in the 10-year count before you accept a start date late in the year. Anyone with an IFICI or NHR offer on the table should compare both regimes with an accountant first, since choosing one closes the other for good.
FAQ
Do I lose IRS Jovem if I work part of the year abroad?
Not because of travel alone. The benefit depends on earning category A or B income as a taxpayer in Portugal in that year and on meeting the age and exclusion rules.
Can a couple both use IRS Jovem?
Yes. Each spouse or partner who meets the conditions gets their own exemption on their own income, with their own cap.
Does IRS Jovem reduce Social Security contributions?
No. It is an income tax exemption only. Social Security contributions on salary and freelance income are unchanged.
What happens if I forget to tick the option?
The exemption applies only when you opt in the return. If you missed it, you can file a replacement return (declaração de substituição) on the Portal das Finanças within the legal deadlines.
