Spain's 2023 state budget: spending, pay, pensions and taxes

Automatic summary, not yet reviewed

1. The state budget for 2023 is approved, with spending credits of 485,985,812.22 thousand euros and a non-financial spending limit of 198,221 million euros set by the Government.
2. Public sector pay rises by a fixed 2.5% in 2023, plus two review clauses of 0.5% each, one tied to the harmonized consumer price index and one to nominal GDP.
3. Social Security and Clases PasivasClases Pasivas The pension scheme for former civil servants and military personnel, separate from the general Social Security system. pensions are indexed in 2023 according to the average inflation of the twelve months before December 2022; the law sets the procedure, not a fixed percentage.
4. Personal income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings. (IRPFIRPF Impuesto sobre la Renta de las Personas Físicas: Spain's personal income tax, paid on work income, pensions and other earnings.) is cut for workers and pensioners: the deduction for work income increases and the gross salary threshold at which the tax starts being paid rises from 14,000 to 15,000 euros a year, extended up to 21,000 euros.
5. Savings income tax rates in IRPF go up: the new scale taxes savings income from 9.5% to 14% depending on the taxable base.
6. The maternity deduction is expanded: up to 1,200 euros a year per child under three, plus up to 1,000 euros for childcare costs.
7. Tampons, sanitary pads, panty liners, condoms and other non-medicinal contraceptives move to the reduced 4% VAT rate.
8. Small companies with revenue under one million euros now pay corporate income tax at 23% instead of 25%.

Who it affects

• Public employees and public sector staff: Their pay rises by a fixed 2.5% in 2023, with possible extra increases of 0.5% tied to the harmonized CPI and GDP.
• Pensioners: Their pensions are indexed to average inflation over the twelve months before December 2022.
• Low and middle income workers and pensioners: They pay less income tax: the filing threshold rises to 15,000 euros and the work income deduction improves.
• Parents of children under three: They can apply a maternity deduction of up to 1,200 euros a year, plus 1,000 euros for childcare costs.
• Small businesses and self-employed workers: Companies with under one million euros in revenue pay 23% corporate tax; the self-employed get income tax reductions.

Words worth knowing

IRPF

Impuesto sobre la Renta de las Personas Físicas: Spain's personal income tax, paid on work income, pensions and other earnings.

IPCA

Índice de Precios de Consumo Armonizado: the harmonized consumer price index, the inflation measure calculated the same way across the European Union.

Clases Pasivas

The pension scheme for former civil servants and military personnel, separate from the general Social Security system.

Base liquidable del ahorro

The taxable base for savings income: the portion of income from interest, dividends or capital gains that savings tax rates apply to.

Mecanismo de Recuperación y Resiliencia

The Recovery and Resilience Mechanism: a European Union fund created after the pandemic to finance reforms and investments in member states.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries