The IRS Jovem option is annual and can be renewed or changed each year.

The IRS Jovem option for those already using this treatment is annual and can be renewed or changed each year, the Treasury Department told Lusa.

“Taxpayers who take advantage of the current IRS Jovem rate (as amended by IRS Code Section 12.º-B) in 2024 will be able to elect to use this treatment (as an alternative to the new IRS Jovem rates). ),” says the response to Lusa, an official source in the Ministry of Finance, that “this option will be annual in nature and can be extended or changed every year.”

The new fledgling IRS model, approved last week by the Council of Ministers, works differently than the one currently in place because it cuts up to a third of the tax rates that apply to work income groups except 9 IRS 1st and final step.

The current model provides an exemption from income tax for five years, which decreases over time, and in the first year of use of the benefit the exemption covers 100% of the income received by the young person (up to a maximum amount). 40 times the social support index, that is, 20,370 euros taking into account the cost of IFRS 2024).

At a routine “briefing” that follows a meeting of the Council of Ministers, the Prime Minister and the Minister of Youth and Modernization stressed that no young person would be harmed by the rule change, noting that it would be possible for anyone already benefiting from the current select new.

The Treasury clarifies that this option is annual and can be “modified or extended” each year, further clarifying that “young people who will benefit from the current regime in 2024 will be able to choose to apply this regime, so that no young person , who enjoys the benefits of the current regime, will not suffer.”

The two IRS Jovem regimes only have the fact that they both cover income from dependent and independent work (green slips) and a maximum age (35 years), although the current regime does not apply globally to everyone under that age before allowing five years of benefits. which will be used (sequentially or interpolated) until this age.

Under the current regime, after the IRS exempts 100% of income up to the 40 IAS limit granted in the first year, the exemption is reduced to 75% of income (to a maximum of 30 IAS) in the second year, decreasing to 50% in the third and fourth years (with a cap 20 times the IFRS value) and 25% (up to the limit of 10 IFRS) in the fifth and final year.

In the new regime, which has yet to be discussed and approved by the Assembly of the Republic, where the parties supporting the current government do not have a majority, there is the possibility of reducing IRS rates by one third, with the exception of those that affect the last level – where are the people who receive income from work above 81,199 euros per year.

Thus, in the first taxable income group (€7,703 per year), young people under 35 years of age will pay a rate of 4.4% instead of the 13.25% that most people pay; at the second level the applicable rate will be 6.0% instead of 18%, and at the third it will be 7.67% instead of 23% – and, according to the government, it is up to this level that most recipients will have the measure and which will be about 370 thousand.

This one-third rate reduction continues until band 8, in which case the rate applicable to people under 35 is 15% (45% for most taxpayers over this age group).

The new IRS Jovem is available to all workers under the age of 35, regardless of their skill level, and can be used for almost two decades – if you count a person who starts working at 16 years old.