The administration plans to strengthen the IRS tax exemption for young people while expanding the limits of the tax exemption.
Therefore, and in accordance with the 2024 state budget proposal, young workers will receive a 100% exemption from the IRS in their first year of work, up to a limit of 40 times the value of the Social Support Index (IAS). In the second year the exemption is 75%, meaning only 25% of your income is taxed, but the limit is now 30 times the IAS value.
In the third and fourth years the exemption drops to 50% and the limit is 20 times the IAS value. In the fifth and final year of this benefit, the exemption only applies to 25% of the income, with the limit being 10 times the IAS value.
The measure represents a total benefit of more than 85,000 euros, over the five years it will be in force, and, says the Minister of Finance, “this regime is a powerful instrument for valuing and strengthening the salaries of young people”.
IRS Jovem targets all young people between 18 and 26 years old (or 30, in the case of a PhD) with a qualification at level 4 (vocational training) or higher, and benefits more than 80 thousand young people per year.
“Since its inception in 2020, the number of young people benefiting from the scheme has grown exponentially (10,286 beneficiaries in 2020, 37,199 beneficiaries in 2021 and 73,684 beneficiaries in 2023),” reads the report accompanying the proposed 2024 state budget.
In addition, and because, according to Fernando Medina, it is necessary to pay “particular attention” to young people, thus helping to “reduce the costs and burdens” in the transition phase from study to the labor market, the government will from 2024 provide an incentive for young new graduates in the amount of one year’s tuition fees for each year of declared work in Portugal. A way to “encourage more qualified young people to stay in the country,” the executive assumes.
After obtaining a diploma or master’s degree and upon presentation of the IRS statement for the working year, the recent graduate is entitled to a refund of the amount equal to the tuition fees paid during the number of years corresponding to the diploma (up to a maximum four years), integrated master’s degree (maximum six years) or master’s degree (two years), as long as you continue to work in Portugal “every year”.
The maximum amount to be refunded for each working year is a maximum of 697 euros for integrated bachelor’s and master’s programs and a maximum of 1500 euros for master’s programs.
Source: DN
