Income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings. reform: new tax brackets, 18 % savings rate, family benefits

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1. The personal income tax (IRPFIRPF Impuesto sobre la Renta de las Personas Físicas: the Spanish personal income tax that individuals pay on their earnings.) taxes the income of individuals under the principles of equality, generality and progressivity, taking into account their personal and family circumstances.
2. Income is split into two parts: the general taxable base and the savings taxable base. Income from movable capital and capital gains from asset transfers make up savings income.
3. Savings income is taxed at a flat rate: 11.1 % state and 6.9 % regional, adding up to 18 % for most taxpayers.
4. Employment income gets a reduction ranging from 4,000 euros a year for net income up to 9,000 euros, down to 2,600 euros for income above 13,000 euros. It doubles for workers over 65 who keep working and for unemployed people who accept a job in another town.
5. Personal and family minimums are kept and are not taxed: 5,050 euros per taxpayer, plus amounts for descendants, ascendants and disability, with an extra 2,200 euros for children under three.
6. Contributions to pension plans and other social security systems reduce the taxable base, with a joint limit of 10,000 euros a year (12,500 euros for those over 50). The previous 40 % reduction for lump-sum withdrawals is eliminated.
7. The deduction for investment in a main home is kept (10.05 % state and 4.95 % regional, with a maximum base of 9,015 euros a year), and a new maternity deduction of up to 1,200 euros a year per child under three is created.
8. No tax return is required with employment income up to 22,000 euros a year from a single payer, and the law takes effect on January 1, 2007 for income earned from that date.

Who it affects

• Employees: They pay less income tax due to the larger reduction on employment income and the personal and family minimums.
• Savers and people selling assets: Their savings income is taxed at a flat 18 % rate, regardless of how long the investment lasted.
• Pension plan holders: They can reduce their taxable base under tighter limits, and lump-sum withdrawals lose the 40 % reduction.
• Working mothers with children under three: They can apply a deduction of up to 1,200 euros a year per child.
• Owners buying or renovating their main home: They keep the home investment deduction with a maximum base of 9,015 euros a year.

Words worth knowing

IRPF

Impuesto sobre la Renta de las Personas Físicas: the Spanish personal income tax that individuals pay on their earnings.

Base imponible

Taxable base: the amount of money on which the tax is calculated, after adding income and subtracting expenses.

Base liquidable

Net taxable base: the taxable base after applying legal reductions, such as those for pension plans.

Mínimo personal y familiar

Personal and family minimum: the portion of income that is not taxed because it is considered to cover the taxpayer's basic needs and those of their family.

Retención

Withholding: money that whoever pays a salary or income advances to the tax authority on account of the recipient's tax.

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