Portugal's Young IRS tax regime expands to workers under 35 in 2025
Changes to Portugal's Young IRS tax regime have been announced in the 2025 State Budget. The updates expand eligibility to workers up to 35 years old, up from the previous limit of 30. However, those who have used the Non-Habitual Resident (NHR) regime remain excluded from the new benefits.
The revised Young IRS rules will first apply to income earned in 2025. Taxpayers will declare this income between 1 April and 30 June 2026. For income declared in 2025, the older Young IRS regulations still stand.
The Young IRS regime offers partial tax exemptions over a ten-year period. Higher earners face a cap, with exemptions limited to income up to 55 times the Social Support Index (IAS). To qualify, applicants must submit a formal request and receive approval. Taxpayers currently or previously enrolled in the NHR regime cannot access the Young IRS benefits. This includes those who benefited from NHR between 2019 and 2024. Additionally, failing to complete Annex L of the IRS return does not automatically waive NHR benefits—taxpayers must submit a formal waiver request instead.
The updated Young IRS regime broadens access to younger workers but maintains restrictions for NHR beneficiaries. Eligible taxpayers can apply for the exemption, with the new rules taking effect for 2025 income. The changes aim to simplify tax relief while keeping caps for higher earnings.
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