Portugal rejects!
There is a question you should ask before filing your tax return:
Are you paying more tax… without even knowing it?
IRS Jovem is not a tax benefit: It is one of the most relevant tools today to reduce the income tax burden on employment income, whether you are employed or self-employed.
But there is an uncomfortable detail: it only fully works for those who understand it and actively claim it.
What is in practice?
It is a regime that allows a progressive exemption from income tax on employment earnings.
It is time + percentage:
- 1st year → 100% exempt
- 2nd to 4th year → 75% exempt
- 5th to 7th year → 50% exempt
- 8th to 10th year → 25% exempt
With an annual exempt income limit of around €28,737.50 (2025 reference) and €29,542.15 (2026 reference).
The detail that changes the interpretation
Even exempt income does not disappear from the system.
It is still included in the calculation of the IRS tax bracket. Which is why it is called a progressive exemption.
In other words: you do not pay tax on that portion, but it still affects the IRS rate applied to the rest of your income.
Who can benefit?
- Up to 35 years old
- No longer a dependent (filing taxes independently)
- Earned income (Category A or B)
- Regardless of nationality
- Applicable during the first 10 years of working life or until age 35
And yes: it must be activated in your tax return. A single checkbox can change everything.
The point almost no one understands
This regime does not start when you discover it.
In fact, it starts in the first year you file your taxes independently.
And as a result, that creates a silent effect:
You could be in your 5th, 7th, or 9th year of your career…
without ever having activated it.
Meanwhile, the International Monetary Fund has repeatedly argued for limitations or a review of this type of tax benefit.
However, in response, the Portuguese Government has been clear: this is an internal political choice, linked to how the country chooses to structure incentives for young workers.
Ultimately, this is not just a technical issue. It is a decision about an economic model.
The final question
Have you already activated this possibility of paying less tax?
See you later,
Ana Coelho
Source: Folheto_IRS_jovem_2025.pdf
