Portugal's Youth Tax Incentive: A Game-Changer for Expats Under 35

Are you under 35 and thinking of moving to Portugal? Or perhaps you're already living here, enjoying the pastéis de nata and sunshine, and wondering if there's a way to lighten your tax burden? The good news is: yes, there is. Portugal offers a compelling tax benefit called the Youth IRS Program (IRS Jovem) that is designed to make life easier for young residents, including expats. If you're part of the globally mobile workforce, a digital nomad, or an international graduate settling into your first job, this article will walk you through exactly how this tax incentive works, who qualifies, and why it might just be one of the best-kept secrets for young professionals

What Is the Youth IRS Program (IRS Jovem)?

The Youth IRS Program is a Portuguese tax incentive aimed at individuals aged 18 to 35, designed to support young people at the beginning of their careers. Its main perk? A partial exemption from income tax (IRS) on your earnings for up to ten years.

This program is part of Portugal’s broader effort to attract and retain talent, both national and international. Whether you're Portuguese or a foreigner with tax residency in Portugal, this benefit applies as long as you meet the eligibility criteria.

Who Qualifies?

Let’s break it down:

- Age: You must be between 18 and 35 years old.

- Residency: You need to be a tax resident in Portugal.

- Type of Income: You must earn income from employment (Category A) or independent professional/business activities (Category B).

- Declaration: You must opt into the program when filing your annual tax return (Modelo 3).

For Foreigners

If you're moving to Portugal from abroad, you're eligible too. Here’s what you need:

- A Portuguese Tax Identification Number (NIF).

- Registered tax residency in Portugal.

- Eligible income earned in Portugal.

The process is straightforward, but if you’re new to the Portuguese tax system, getting help from a relocation expert like moviinn® can make the transition much smoother.

How Does the Reduction Work in 2025?

The Youth IRS Program provides an exemption from IRS (Income Tax) on a portion of your income, spread across a 10-year period (consecutive or not), provided it doesn't extend beyond the year you turn 35.

Here's the breakdown of the exemption rates:

The cap is calculated based on 55 times the IAS (Indexante dos Apoios Sociais), which in 2025 amounts to €28,737.50. The exemption applies to income from Categories A and B.

Example: If you earn €25,000 in your first year, the entire amount is exempt from IRS (Income Tax) in that year. If you earn more than €28,737.50, the exemption is limited to that cap.

Frequently Asked Questions

1. Is this the same as the NHR or IFICI tax regime?

No, and it cannot be combined with them. The former NHR (Non-Habitual Resident) regime has been discontinued, and its replacement is the IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação).

These regimes are not compatible with the Youth IRS Program. You must choose one. If you’re unsure which is best for your profile, consult a qualified advisor or explore our detailed IFICI Tax Regime Guide.

2. Can I combine the Youth IRS Program with IFICI?

No. These regimes are mutually exclusive. You cannot be enrolled in both the Youth IRS Program and IFICI, nor the ex-resident tax regime. Additionally, you cannot benefit from IRS Jovem if you have an irregular tax status.

3. Is this only for salaried workers?

No. Both salaried employees (Category A) and self-employed professionals (Category B) can benefit, as long as the income is earned in Portugal and declared properly.

4. Can the 10 years be non-consecutive?

Yes! That’s one of the flexible features of this program. You can apply the benefit over ten separate years, as long as they fall before or in the year you turn 35.

Other Tax Benefits for Young Residents

Portugal sweetens the deal for its younger population with a few more perks:

1. Education Expense Deductions: University fees, school materials, and training courses can be partially deducted.

2. Housing Benefits: In some cases, rent payments can also be deducted, depending on your lease and income bracket.

3. IMT & IS Exemption for Buyers Under 35: Since August 2024, a new set of incentives has been introduced for young buyers:

- You can benefit from IMT (Property Transfer Tax) and 0.8% Stamp Duty (Imposto de Selo) exemption if you meet all three criteria:

1. You are 35 years old or younger at the time of the deed.
2. It is your first purchase of an urban property.
3. The property is intended to be your primary and permanent residence.

These incentives aim to ease the path to homeownership for younger generations struggling to enter a rising market. Not only are upfront taxes waived, but they can also be combined with additional support measures.

- Mutual Guarantee Scheme for Young Buyers: To make buying your first home even more accessible, a state-backed mutual guarantee was also introduced. This allows buyers under 35 to avoid the traditional large down payment, with the government backing up to 10% of the property's value, capped at €450,000.

This can make a significant difference when financing your first home, especially in urban areas where liquidity requirements are a major barrier.

Why This Matters for Expats

Moving abroad comes with its fair share of costs, think flights, deposits, bureaucracy (yes, you will come to know AIMA). Any chance to reduce your cost of living and ease your financial transition is a win.

Portugal’s Youth IRS Program offers:

- A lower cost of living compared to other Western European countries.

- A sunny lifestyle that doesn’t break the bank.

- Access to Europe’s job market.

- A gateway to long-term residency and citizenship.

Whether you’re working in tech, teaching English, or launching your startup, these tax breaks can significantly boost your financial security.

Real Talk: Is It Worth It?

Absolutely. Especially when compared to countries like the UK, the U.S., or Canada where young professionals often face hefty income tax bills without the equivalent perks.

In the U.S., a single professional might pay upwards of 22% federal tax plus state tax. In Canada, the marginal tax rate quickly creeps up past 20% once you're earning more than CAD 45,000.

By contrast, under Portugal's Youth IRS Program, you could reduce your taxes by tens of thousands of euros over your early career. It's money in your pocket, not gone to the taxman.

Make Portugal Work for You

Portugal is more than great beaches and wine (although, yes, that too). It’s also forward-thinking when it comes to attracting and supporting young talent. If you're under 35, the Youth IRS Program is a fantastic tool to reduce your cost of living, increase your take-home pay, and make your transition into the Portuguese workforce smoother.

Need Help Navigating It All?

This is where moviinn® comes in. From understanding tax residency to registering your NIF to choosing the right regime, we help expats navigate every detail of their move to Portugal.

Book a free consultation with us today and make sure you’re getting every benefit you deserve. Because moving to Portugal should be more about wine tastings and beach sunsets than tax confusion.