As part of Portugal’s 2025 State Budget, the IRS tax benefit is expanding to offer greater financial support to young workers. This initiative aims to provide enhanced benefits and encourage workforce participation among younger generations.
The IRS program in Portugal has undergone significant changes as part of the 2025 State Budget, offering enhanced financial relief to young workers.
Here’s a detailed breakdown for IRS 2025:
Expanded Age Limit
The program now includes individuals up to 35 years old. Both Portuguese residents and foreign nationals are eligible, as long as they are not dependents.
Eligible Income
The exemption applies to income earned through employment (Category A) or self-employment (Category B), providing broad coverage for young workers in various fields.
Longer Exemption Period
Beneficiaries can now enjoy tax exemptions for up to 10 years, offering an extended period of financial relief.
Exemption Rates Over Time The tax exemptions are structured as follows:
100% in the first year
75% for years 2 to 4
50% for years 5 to 7
25% for years 8 to 10
Income Cap
The annual exemption is capped at 55 times the IAS (Indexante dos Apoios Sociais), which will be updated for 2025.
No Educational Requirements
Unlike previous versions of the program, participants are not required to hold a higher education degree. This makes the program more accessible to a wider group of young workers.
Flexibility in Participation
If beneficiaries experience breaks in income, they can pause the exemption and resume it later within the 10-year period, provided they still meet eligibility criteria.
Ineligible Cases
Some individuals are excluded from the program, such as those benefiting from other tax schemes, including the Non-Habitual Resident (NHR) regime, Programa Regressar, or scientific innovation incentives.
Notification Requirement
Taxpayers must inform their employers or income payers of their IRS Jovem status to ensure accurate withholding and application of the exemption.
Why It Matters
The IRS program is a strategic move by the Portuguese government to support young workers, reduce their tax burdens, and foster career development. It also aims to make Portugal a more attractive place for young talent and entrepreneurs, contributing to both personal and national economic growth.
Need Assistance?
If you’re uncertain about your eligibility or how to maximize your tax benefits under the IRS program, contact our tax expert for personalized guidance.
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