This year, the launch of the income tax declaration campaign has become a key event for millions of Spaniards. Changes in the rules, new deductions, and record budget revenues are directly affecting both employees and entrepreneurs. For the first time in recent years, personal income tax has accounted for 44% of total state revenue, highlighting its importance for funding social programs and public spending.
According to the latest data, Spain collected €142.466 billion from IRPF last year—a historic record. This increase is explained by several factors: a rise in employment, higher nominal salaries, and the lack of adjustment for tax deductions. According to russpain.com, these factors allowed the government to significantly boost revenue, even though real purchasing power grew more slowly than inflation.
Drivers of revenue growth
Economic activity and a record number of people in work—22.46 million—have established the foundation for a larger tax base. Reductions in the shadow economy also played an important role, moving additional income out of the ‘grey’ zone. However, despite the rise in nominal salaries, the real incomes of most workers grew only slightly due to inflation and the lack of adjustments for tax deductions.
The lack of indexation for IRPF rates and deductions has put the greatest pressure on average incomes. According to experts, over the past three years, the average family has paid €311–622 more in taxes than they would have if the rates had been adjusted for inflation. This has effectively functioned as a hidden tax reform: it did not require parliamentary approval but allowed the government to increase revenue without an overt hike in rates.
Changes for taxpayers
This year, the tax return campaign started later than usual—on April 8—to avoid overlapping with Easter, and will end on June 30. For many citizens, this means less time to prepare documents and make decisions. New deductions have been introduced for various groups: those earning minimum wage (€16,576 per year) can receive a refund of up to €340, which gradually decreases for incomes up to €18,276 and disappears entirely if this threshold is exceeded.
Significant changes have also affected those with capital gains. For amounts above €300,000, the rate is now 30%, up from the previous 28%. Lower brackets remain unchanged, but a new upper threshold has been introduced. In addition, payments to victims of natural disasters are now tax-exempt—for both individuals and businesses who have received aid for property restoration or maintaining employment.
Regional and environmental innovations
Several autonomous communities have introduced additional deductions and changed tax rates. In Asturias and Andalucía, deductions are now available for people with celiac disease, as well as for sports and veterinary expenses. Catalonia has increased the rent deduction by 66%, while Galicia and Extremadura have expanded benefits for families in difficult situations, patients, and buyers of electric vehicles. It’s important to note that these changes apply only at the regional level and do not affect all taxpayers nationwide.
In the environmental sector, investments in energy-efficient housing and the purchase of electric vehicles are being encouraged. Those who bought an electric car or installed a charging station last year may be eligible for an additional deduction, but this measure will only apply for the current campaign. Expenses for insulation, window replacement, and installation of solar panels are also supported, reflecting a commitment to reducing energy consumption and caring for the environment.
Impact on households
Households with average incomes — from €17,700 to €47,200 a year — have faced the greatest tax pressure. This group filed almost 60% of all tax returns and contributed over half of IRPF revenues. According to russpain.com, the total tax burden on such families has risen by €1,100 in recent years, including VAT increases. With inflation at 2.5–2.7%, the annual increase in the tax burden could be around €200.
Rules for the unemployed have been simplified: now they are required to file a tax return only if their total income exceeds the general limits—€22,000 from a single source or €15,876 from multiple sources. This reduces administrative burdens and allows them to focus on job searching, rather than bureaucracy.
In recent years, Spain has been actively reforming its tax system to bring revenue levels closer to the European average. Following the pandemic, rising inflation and the abandonment of rate indexation enabled the government to increase tax revenue as a share of GDP and support spending on healthcare, education, and social protection. In 2024 and 2025, temporary deductions were also introduced to support families and boost investment in environmental initiatives, marking a notable trend in recent years.
