IRS Jovem: the partial exemption for workers up to 35

IRS Jovem is a partial exemption from Portuguese income tax on employment income (category A) and self-employment income (category B). It is article 12-B of the IRS Code. Lei n.º 45-A/2024, the State Budget for 2025, strengthened the regime: the age limit is 35, the benefit can cover the first ten years in which you earn that income, the old test of having finished a degree was removed, and each year's exemption is capped at 55 times the IAS. The Ordem dos Contabilistas Certificados and the Tax Authority still describe that wording as the rule for 2026. This page follows that text. It is not a second statute.

The exemption is only from IRS. It does not touch social security, and it is not the flat 20 percent regime for new residents described in the IFICI guide. You have to opt in the annual return. A payslip that already looks light, or a pre-filled message on Portal das Finanças, is not itself the option.

Who can opt

Article 12-B(1), in the wording of Lei n.º 45-A/2024, covers a taxpayer who is up to 35 years old and who is not considered a dependant. The Tax Authority's IRS Jovem leaflet for the 2025 wording of the regime says the age is checked on 31 December of the year the income relates to. Confirm that sentence in the current leaflet before you plan a birthday year. There is no degree requirement in the current n.º 1. The old "finished a cycle of studies" test is gone.

The same leaflet says the partial exemption does not apply if you benefit, or have benefited, from the non-habitual resident regime or from IFICI, if you opted for the tax regime for former residents, or if your tax situation is not in order. Those limits sit in the article itself. Read the current later numbers on the article 12-B page rather than a screenshot of an old form.

If you are still a dependant on your parents' return, IRS Jovem is not available on a return of your own. Their credit, if they have one, is the dependants deduction. The two do not stack on the same person in the same year.

Ten years, four percentages

The exemption applies to the first ten years in which you obtain category A or category B income, and only if you opt. The percentage falls as those years accumulate. The cap below applies on top of every row.

A year in which you have no category A or B income does not use up a year. The benefit pauses and then resumes for the remaining years. It still cannot run past the age limit of 35. Ten calendar years on the clock are not the same thing as ten years in which you actually earned this income.

If you already had years of category A or B income before this version of the regime, do not restart at 100 percent. The transitional rule published with Lei n.º 45-A/2024 places you in the step of the schedule that follows the number of those years already elapsed. Years in which you were a dependant are left out of that count. The note is on the Tax Authority's article 12-B page. Match it to your own history instead of assuming year 1.

The 2026 cap is €29,542.15

Each year's exemption stops at 55 times the IAS. The Tax Authority's newsletter no. 39, January 2026, states the IAS for 2026 as €537.13 and the IRS Jovem limit as 55 × that IAS, which is €29,542.15. Income above the cap is not exempt, even in a 100 percent year. The percentage applies first; the euro cap then cuts the result if the percentage would exempt more than €29,542.15.

Two worked examples

Year 1, employment only, €24,000

Take a general employee in year 1 of the schedule, with €24,000 of category A income and nothing else. €24,000 is under the €29,542.15 cap, and the year-1 percentage is 100 percent, so the category A income can be fully exempt from IRS if the option is valid and the other conditions hold. Social security is a different charge. At the general employee rate of 11 percent, €24,000 × 0.11 = €2,640. That €2,640 is still due. Do not call €24,000 a net salary. Do not call €24,000 − €2,640 a net salary either: monthly IRS withholding can still leave the payslip during the year, and other items such as a meal allowance sit outside this sketch.

Year 3, €40,000 of category A

Year 3 is a 75 percent year. On €40,000 of category A the exemption the percentage alone would give is 0.75 × €40,000 = €30,000. The cap is €29,542.15, and €30,000 is above it, so the exempt amount is €29,542.15, not €30,000. The rest is €40,000 − €29,542.15 = €10,457.85. That €10,457.85 remains in the computation before the specific deduction. It is not a take-home figure, and it is not yet the taxable income that goes into the 2026 brackets.

The exempt income still sets the rate

Article 12-B(4) says the exemption brings the exempt income into englobamento for the purposes of article 22(4). In plain words, the exempt euros are included when the rate on your other income is chosen. They are not invisible. In the year-3 example you do not drop only €10,457.85 into the brackets and stop. The exempt €29,542.15 still counts toward the rate that applies to the taxable remainder, and toward the rate on any other category you have. A tax worked out as if the exempt slice had never been earned will be too low.

The year-1 example is the quiet case. With €24,000 of category A, fully exempt, and no other income, there may be no IRS on that category A at all. The rate rule starts to matter as soon as any non-exempt income exists beside it. Category B on recibos verdes is inside the same exemption, on the same percentages and the same cap, once you have a category B amount. The independent social-security system is not cancelled by article 12-B.

The return is where you opt

You exercise the option in the annual tax return. Article 12-B also says the Tax Authority will tell you, in the automatic return or by pre-filling, that you may benefit. That is information. It is not a substitute for the option. Withholding through the year may not match the final exemption: the employer tables can assume a different slice, or none. The gap is settled on the return. The filing window is in the filing calendar.

The employee calculator and the independent calculator apply the ordinary progressive scale. They do not apply article 12-B. Use them as a sketch of tax without this exemption, then do the percentage, the cap, and the rate rule on paper.