What is IRS Jovem and how does it work?

What is IRS Jovem?

IRS Jovem is a tax benefit that exempts part of the work income of people who are starting out in their careers from income tax. The idea is simple: in your first working years you pay less tax on what you earn, keeping more take-home pay¹.

It applies to category A (employment) and category B (self-employment, the «recibos verdes») income. Since 2025 it no longer depends on your level of education; you just have to meet the age and the other conditions.

Who qualifies?

There are three main conditions²:

• Age up to 35, measured on 31 December of the year the income relates to.
• Work income in category A or B.
• Not being a dependant on someone else's IRS return (typically your parents').

The count of years starts in the first year you earn work income no longer as a dependant. It need not be consecutive: if there is a period without work income, the benefit can resume. What counts is the total number of years with the exemption, up to 10.

The percentages: 100%, 75%, 50%, 25%

The exemption is not fixed: it starts high and steps down over the 10 years¹.

What counts is the benefit year (the 1st, the 2nd, …), not the calendar year. If you pause and resume, you carry on from where you left off in the table.

The cap: 55 × IAS

There is an annual cap on the exempt part: 55 times the IAS. With the 2026 IAS set at €537.13³, that cap is:

55 × €537.13 = €29,542.15

So even in year 1 (100%), no more than €29,542.15 of income is ever exempt. Anything above that is taxed normally. For most salaries the cap does not even come into play, it only bites on higher incomes.

Worked example

Take an annual work income of €20,000.

• Year 1 (100%): the full €20,000 is exempt (below the cap). Nothing is left to tax.
• Year 2 (75%): €15,000 is exempt; the remaining €5,000 is taxed again.
• Year 5 (50%): €10,000 is exempt; €10,000 is taxed.

And on a high income of €45,000 in year 1: a 100% exemption would be €45,000, but the cap holds it at €29,542.15, the remaining €15,457.85 is taxed.

Run the numbers for your own case in the IRS Jovem calculator.

Watch out: it is an exemption 'with progressivity'

This is the part that confuses people most. Income exempted by IRS Jovem does not disappear for all purposes: it is still counted to set the IRS rate applied to the income that is not exempt¹.

In practice this means IRS Jovem lowers the tax, sometimes substantially, but not as much as if the exempt income simply did not count. That is why an exemption calculator shows how much income is exempt, while the final tax in euros depends on your other income and circumstances. For that calculation, see how IRS is calculated and use the IRS calculator.

And net salary?

IRS Jovem reduces both withholding and the annual tax, so it raises your net salary in your first working years. To see the effect of the deductions on what reaches your account each month , Social Security (11%) and IRS, use the net salary calculator.