How does the new Young IRS regime work?
Notice how the new Young IRS regime will work, with the changes imposed by the Government to benefit young people even more.
These are the changes to the Young IRS 2025 compared to the 2024 incomes.
According to the Government, in 2025, the IRS Young regime referring to the 2024 income underwent significant changes to benefit young workers.
This new regime applies to all youth up to 35 years, regardless of their level of education, and consists of a reduction in IRS on labor income.
The main changes include:
Maximum age: Eligibility has been extended up to 35 years of age.
Benefit duration: The period of application of the regime has been extended to a maximum of 10 years.
Exemptions percentages:
- 100% in the 1st year of income earning.
- 75% from 2nd to 4th grade;
- 50% from 5th to 7th grade;
- 25% from 8th to 10th grade.
Maximum income limit: The exemption applies to annual incomes up to 55 times the value of the Social Support Index (IAS), approximately €28,700.
Note that the 1st year of income mentioned in Young IRS corresponds to the first year the young person started working and earned taxable income from categories A (employment by others) or B (self-employment), regardless of whether it is the first year they join the Young IRS.
For example, if you started working in a certain year and had taxable income in that year, that will be considered the 1st year of earning income. If you only opt for Young IRS Young in subsequent years, the benefit will be based on the number of years of income already earned and not on the year of joining the regime. That is, if you started working in 2023 and only joined Young IRS in 2025, you will already be in the 3rd year of income.
To access the Young IRS, young people must:
- Check if they meet the age and income type requirements (categories A or B).
- Indicate the option for Young IRS in the annual income statement (Model 3), selecting appendix A or B as applicable.
These measures aim to support young workers, promoting their financial stability and incentivizing talent retention in Portugal.
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