IRS Jovem 2025: Everything You Need to Know About Tax Benefits for Young Professionals IN PORTUGAL

Portugal offers remarkable tax advantages for young expats through the IRS Jovem program. This initiative is tailored to support both salaried employees and self-employed individuals (under specific conditions within the Regime Simplificado), making it an excellent opportunity for young professionals relocating to Portugal. The program aims to ease the financial burden on expatriates, attract talent from abroad, and encourage them to build their careers in the country.

What Is the IRS Jovem Program?

The IRS Jovem program targets taxpayers aged 18 to 35 who are tax residents in Portugal. It provides a phased income tax exemption for earnings up to €28,000:

• 1st year: 100% exemption.
• 2nd to 4th years: 75% exemption.
• 5th to 7th years: 50% exemption.
• 8th to 10th years: 25% exemption.

Important Note:
Income exceeding the exemption limit (€28,000) is taxed at the standard progressive IRS rates.

Who Is Eligible for IRS Jovem?

The program applies to income from the following categories:

Category A: Income from salaried employment.
Category B: Income from self-employment (freelancers or individuals under the Regime Simplificado).

Eligibility Requirements:

• Be between 18 and 35 years old.
• Be a tax resident in Portugal.
• Earn no more than €28,000 annually (to qualify for the exemption).
• Correctly declare income using Portugal’s Modelo 3 tax form.

Practical Examples

Example 1: Employee with a €35,000 Salary

An employee earning a gross annual salary of €35,000 will benefit from the IRS Jovem program. In the 1st year, the first €28,000 is tax-exempt. The remaining €7,000 is taxed at standard rates.

Tax Calculation:

13% on €7,000
Tax due: €910

• Effective Tax Rate: Only 2.6% of total gross income is taxed.

Example 2: Freelancer under the Regime Simplificado with €40,000 Revenue

A graphic designer operating under the Regime Simplificado generates €40,000 in annual revenue. Under this regime, 75% of revenue is considered taxable income.

• Taxable Income:
• 75% of €40,000 = €30,000

Of the €30,000, the first €28,000 is tax-exempt in the 1st year.
The remaining €2,000 is taxed at standard rates.

Tax Calculation:

13% on €2,000
Tax due: €260

• Effective Tax Rate: Only 0.65% of total revenue is taxed.

How Does Regular Income Tax Work in Portugal?

Portugal uses a progressive tax system for income tax (IRS).
For 2025, the rates are as follows:

• Up to €8,059: 13%
• €8,059 – €12,160: 16.5%
• €12,160 – €17,233: 22%
• €17,233 – €22,306: 25%
• €22,306 – €28,400: 32%
• €28,400 – €41,629: 35.5%
• €41,629 – €44,987: 43.5%
• €44,987 – €83,696: 45%
• Above €83,696: 48%

Is IRS Jovem Worth It?

The IRS Jovem program offers significant tax savings, particularly for young professionals with moderate incomes. For employees, this means higher net salaries. For freelancers under the Regime Simplificado, the effective tax burden is drastically reduced, making self-employment much more attractive.

Conclusion

The IRS Jovem program is an excellent opportunity for young professionals in Portugal to reduce their tax burden and optimize their earnings. Both employees and freelancers can benefit, provided they meet the legal requirements.
If you want to maximize the benefits of IRS Jovem and apply these advantages to your specific tax situation, get in touch with CONSALT. today. We specialize in Portuguese taxation and help young professionals and entrepreneurs save on taxes and manage their finances effectively.

Contact us now to schedule your personalized consultation!