Changes in 2024 Personal Income Tax (IRS) for Young Professionals

7 February 2024

The Portuguese Government created a tax benefit for young professionals, providing them with tax discounts to alleviate financial burdens. This initiative, introduced to bolster the financial standing of young professionals embarking on their careers, underwent notable revisions in 2024.


The primary modification entails a complete exemption from taxes during the first year of employment, applicable to both dependent and independent workers. Dependent workers, engaged under formal employment contracts, receive wages from entities, while independent workers conduct professional activities without such contracts.


Following the initial year of total exemption, taxpayers enjoy an additional four years of partial exemption, which can be consecutive or interspersed, ensuring flexibility during periods of unemployment.


With the revisions implemented in 2024, the discount structure for the five-year period of the Personal Income Tax (IRS) for young individuals varies as follows:


  • A 100% tax exemption is granted in the first year, applicable if the total income does not exceed 40 times the indexante dos apoios sociais (IAS), which amounts to €509.26 in 2024. If the income exceeds this amount, the excess portion is subject to taxation;
  • A 75% tax exemption is provided in the second year, with a maximum total exemption corresponding to 30 times the IAS;
  • In the third and fourth years, a 50% tax exemption is applicable, with the maximum total exemption corresponding to 20 times the IAS;
  • Finally, a 25% discount is available in the fifth year, with the maximum total exemption corresponding to 10 times the IAS.


IAS serves as a reference value for calculating, measuring, and updating various social benefits provided by the Portuguese state.


Eligibility for these discounts is contingent upon certain criteria, including:


  • Holding a high school diploma or higher between the ages of 18 to 26;
  • Holding a PhD until the age of 30; and 
  • Filing separate tax returns from parents even with the same tax residency.


Beneficiaries can benefit from this discount for a period of 5 years until they reach the age of 35, with these 5 years being consecutive or interspersed.


It is also important to note that this benefit cannot be combined with the Non-habitual Resident (NHR) Tax Regime or the Programa Regressar. 


This taxation benefit underscores Portugal's commitment to economic development, sectoral support, and enhancing taxpayers' well-being. Navigating the intricate landscape of taxation requires expertise to make informed decisions and achieve financial objectives. 



Should you require further assistance on this tax matter or any other related issues, please do not hesitate to contact us. We will be delighted to offer our support.

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