YOUTH IRS IS NOW IN EFFECT: WHAT IS IT, WHO BENEFITS, AND HOW TO JOIN?

YOUTH IRS IS NOW IN EFFECT: WHAT IS IT, WHO BENEFITS, AND HOW TO JOIN?

Young people up to the age of 35 can now ask their employers to benefit from IRS discounts. Find out how.
The new Youth IRS has been in effect since January 1, 2025. It has generated a wave of questions among younger workers who want to sign up for income tax discounts on their salaries. To help you benefit from this support provided for in the 2025 State Budget, we have put together a guide with questions and answers about IRS Jovem based on clarifications from the government itself.

What is IRS Jovem?

This new IRS Jovem model is intended for all young people up to the age of 35, regardless of their level of education. It consists of “a reduction in the IRS paid on income from work subject to IRS, with a maximum time limit of 10 years, through an exemption,” explains the Government in a press release published on its official website.
These are the IRS discounts provided for young people depending on the year in which they started to earn their own income:

It should be noted that this exemption is limited to 55 times the value of the IAS (Social Support Index), i.e., approximately €28,700/year (previously, the exemption limit was only 40 IAS). This is one of four changes in the new IRS Jovem model compared to the previous one, with other changes including an increase in the maximum age from 30 to 35, an extension of the benefit (from 5 to 10 years), and access to the scheme regardless of educational level.


Which years of work count?

“For the calculation of the maximum period of 10 years, all years in which income is obtained from categories A (employees) or B (self-employed workers) are taken into account,” explains the Executive.
And “the count begins in the first year in which a young person files an IRS tax return, without being considered a dependent, and in subsequent years, except for those in which no income is earned in those categories,” it further clarifies. Therefore, all income statements as a dependent do not count towards the IRS Jovem.
For example, if you are 30 years old and started filing your IRS tax return on your own in 2019 (with income from 2018), this means you have six years of work. And by completing your seventh year of wages this year, you will be able to benefit from an IRS exemption on 50% of your income. The remaining amount will be subject to the withholding tax rate set out in the IRS tables for 2025, taking into account your total income (both exempt and non-exempt).


Who can benefit from IRS Jovem?

All young people up to the age of 35 who have been filing their own IRS returns for less than 10 years and whose tax situation is in order. Therefore, young people cannot be identified as dependents, i.e., they cannot belong to their parents' household, even if they have the same tax domicile. 
According to the Government, the following young people are not eligible for IRS Jovem: 

Can those who earn more than €28,737 benefit from the IRS Jovem?

In principle, yes, but only partially. As the exemption is limited to 55 times the IAS, i.e., €28,737.50 per year or €2,052 gross per month, this means that up to this amount it is possible to benefit from the IRS discount in full or in part. Above this amount, annual income from work will be taxed at the general rates applied in the 2025 withholding tax table.
This means that the tax relief provided for in the IRS Jovem applies only to €28,737 of annual income, with the remaining income subject to normal IRS rates.


What do you need to do to benefit from IRS Jovem?

There are two ways to benefit from IRS Jovem: either sign up now and get a discount on your monthly salary, or settle your accounts with the tax authorities in your annual IRS tax return in 2026.
Anyone who wants to can sign up for IRS Jovem starting in January, so that the exemption has an impact on monthly salaries through a reduction in withholding tax. To do so, you must ask your employer to apply the benefit, under Article 99-F of the IRS Code, and indicate the year in which you start working (i.e., earning income), provided you are not a dependent. 
“With this information, the employer will apply the withholding tax rate that would be due for the total income, including exempt income, only to the portion of income that is not exempt, depending on the year to which the exemption refers,” they explain. Please note that on the 2025 IRS return to be filed next year, you must indicate that you have benefited from this scheme.
Alternatively, young people can choose to benefit from this IRS reduction only next year, when they submit their income tax return. “Young people can indicate that they wish to benefit from Article 12-B of the IRS Code in their annual income tax return (Model 3 return), which is submitted through the Finance Portal between April and June of the following year,” they add.


How much will a young person save?

To understand how much a young person can save by joining the IRS Jovem scheme, the government used the example of a worker who earns €1,000 per month (a total of €14,000 per year).
In this case, the young person will save €800 in tax in the first year, with 100% of their salary exempt from IRS. And “after 10 years of benefits, the savings will amount to more than €7,200, which corresponds to an increase of almost €3,500 compared to the previous IRS Jovem regime, which was in force in 2024,” he explains.

Source: idealistanews