IRS Jovem 2026: Portugal's youth tax break explained
IRS Jovem exempts part of the income of people aged 35 or under, during their first 10 years of work.
Who qualifies
- Aged 35 or under in the income year;
- Not a dependant of someone else;
- Employment income (category A) or freelance income (category B);
- Tax resident in Portugal.
Since 2025 your level of education no longer matters. The years count from the first year you have work income; years in which you were a dependant on your parents' return do not count.
It does not combine with IFICI, Programa Regressar or the old NHR regime, and non-residents cannot use it — see the guide for foreigners.
How much is exempt
| Income year | Exempt share |
|---|---|
| Year 1 | 100% |
| Years 2–4 | 75% |
| Years 5–7 | 50% |
| Years 8–10 | 25% |
The exemption is capped at 55 × IAS = €29,542.15 a year in 2026. Anything above that is taxed as normal: in year 1, earning €2,500 × 14 = €35,000, €29,542.15 is exempt and €5,457.85 is taxed.
Withholding
Tell your employer which IRS Jovem year you are in: they apply the table rate for your full salary, but only to the non-exempt part (and the exempt part is capped at €2,110.15 a month). Freelance clients withhold the normal rate and you get the difference back in your refund.
Example: €2,000 gross a month
Single, no dependants, Mainland. Social Security (11%, €220) is always due — IRS Jovem does not touch it.
| Regime year | IRS withheld | Net/month |
|---|---|---|
| No IRS Jovem | €301.34 | €1,478.66 |
| Year 1 | €0.00 | €1,780.00 |
| Years 2–4 | €75.34 | €1,704.66 |
| Years 5–7 | €150.67 | €1,629.33 |
| Years 8–10 | €226.01 | €1,553.99 |
On the annual return (€28,000 a year, general expenses only, 2026 budget-law rates) the final tax drops from €3,938.65 to €0 in years 1–4, €759.10 in years 5–7 and €2,686.33 in years 8–10.
Over the full 10 years, if salary and rules stay the same, that adds up to around €29,000 in tax saved.
What is not exempt
IRS Jovem only covers work income: salaries (category A) and freelance income (category B). Rental income, interest, dividends and capital gains are taxed as usual, and Social Security contributions do not change.
How to claim it
- During the year: tell your employer you qualify and which year of the regime you are in, so withholding only applies to the non-exempt part.
- In your IRS return: opt for IRS Jovem and state the year. The exemption is confirmed when your return is assessed.
- As a freelancer: keep issuing invoices with normal withholding; the difference comes back in your refund.
Common mistakes
- Assuming Social Security is exempt too. It is not.
- Miscounting the years. A year with any work income counts as a regime year, even if you only worked a few months.
- Not telling your employer — you only get the money back in next year's refund.
- Confusing it with IMT Jovem, the separate exemption for buying your first home (see the IMT guide).
FAQ
Do I need a degree?
No. Since 2025 it applies regardless of education.
I changed jobs mid-year. What now?
Tell the new employer your regime year. The annual cap is per person, not per employer.
Will my refund be bigger?
If your employer already withholds only on the non-exempt part, your refund will not change much. If you never told them, the whole exemption shows up in your refund. See the IRS refund guide.
Does it apply to freelance income?
Yes, to category B as well, with a single €29,542.15 cap for salary and freelance income combined. Clients still withhold the normal rate. See the freelance guide and the net salary guide.