How does the new Young IRS regime work?

These are the changes to the Young IRS 2025 compared to the 2024 income  

According to the Government, in 2025, the young IRS regime for the 2024 income has undergone significant changes to benefit young workers.  

This new system applies to all young people up to 35 years old, regardless of their level of education, and consists of a reduction in income tax 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 scheme has been extended to a maximum of 10 years.  

Exemption percentages:

• 100% in the 1st year of income acquisition;  

• 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 IAS (Social Support Index), approximately €28,700.

Note that the 1st year of income mentioned in Youth IRS corresponds to the first year the young person started working and obtained taxable income from category A (employed work) or B (self-employed work), regardless of whether it is the first year they join Youth IRS.

For example, if you started working in a certain year and earned taxable income in that year, that will be considered the 1st year of earning income. If you choose the Young IRS only in subsequent years, the benefit will be based on the number of years of income already obtained and not on the year of joining the regime. That is, if you started working in 2023 and joined the Young IRS only in 2025, you will already be in the 3rd year of income.  

Read more: How does counting years for young IRS work?

To access Youth IRS, young people must:

• Check if they meet the age and income type requirements (categories A or B).

• Select the option for Young IRS in the annual income statement (Model 3), selecting Annex A or B as applicable.  

These measures aim to support young workers, promoting their financial stability and encouraging talent retention in Portugal.

Find out more:  Young IRS: You can now ask the employer to apply the deduction with the discount

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