The Ministry of Finance plans to increase the salary exempt from personal income tax withholding to 15,875 euros, thus ensuring that the new minimum interprofessional salary (SMI) in 2024 (1,134 euros for 14 months of payments) will not be subject to any deductions due to payments due to tax. The draft royal decree, which the Treasury made available to the public this Wednesday, also increases the general deduction in personal income tax for the lowest salaries (up to 19,747.5 euros net) and will increase for the 2024 income tax return (to be submitted in 2025) lamount required to be submitted (currently from the full return of 22,000 euros, or 14,000 euros if from multiple payers).
According to calculations Register of Tax Consultancy Economists (Reaf), dependent General Council of Economists, The increase in the Treasury’s proposed deduction for earned income will save 163.51 euros in tax on next year’s income tax return for workers earning the equivalent of the inter-professional minimum wage (€15,876) this year. For a gross salary of 18,000 euros, the savings will be 49.30 euros, and for those with a gross salary of 21,000 euros it will decrease until it drops to just 1 euro.
Reaf’s exercise is a guess. It was carried out according to theoretical assumptions. regional tax rate It should be the same as that of the State, although it may be different in each society. But Reaf’s calculations serve to form an approximate idea of the effect of the measure, as his technical secretary explained: Ruben Gimeno.
The full interprofessional minimum wage will reach your pocket
The minimum amount exempt from withholding tax is the amount of gross annual salary below which the employer (entrepreneur or administration) is not. have to detain for income tax reasons.
According to the change proposed by the Treasury, the minimum amount exempt from withholding tax will increase from 15,000 euros in 2023 to 15,875 euros in 2024. This means that gross wages below this amount, which coincides with the new inter-professional minimum wage, will be fully realised. into the worker’s pocket without any discount.
The lowest salaries will receive a smaller reduction in personal income tax
The Treasury decree also provides for a lower withholding tax for net salaries of up to 19,747.5 euros. In this case it is not a fixed amount but the result of a mathematical formula.
Lower wages will pay less taxes
In addition to reducing the account withholding tax applied to the lowest-paid payrolls, the Treasury planned to increase the deduction that can be applied to the lowest-paid payrolls in the income tax return. This will mean lower tax payments.
Specifically, workers whose net salary in 2024 is less than or equal to 14,852 euros will be able to benefit from a general reduction in labor income of 7,302 euros (1,737 euros more than so far) when they submit their returns for this year next year. . (For 2023, the general deduction was €5,565 for net salaries up to €13,115 per year).
The deduction from earned income will be between €7,302 (for net salaries up to €14,852) and €0 (for net salaries of €19,747.5), according to the mathematical formula that determines the standard.
The same goes for retirement.
The financial rules of the game that apply to salaries have the same consequences for pensions.
Changes will be noted in the January pay slip and 2025 return
According to the provisions of the draft royal decree, Low withholding tax on payrolls will be noticed in Januaryor from February (in any case retroactively from January 1).
Increase in the general discount on labor income for salaries below 19,747.5 this year It will be especially noticeable in 2025, In the form of lower personal income taxes when a 2024 income tax return is filed. Again, It will also be noticed in 2024 such that the new amount will set a lower withholding tax for net salaries, ranging from 15,875 euros for gross salaries (there will be zero withholding tax) to 19,747.5 euros.
The new limit at which it will be mandatory to file an income tax return is also Will be noticed in 2025. Currently, in the campaign for income tax returns obtained in 2023 (opening from April 3 to July 1), the limit of 22,000 euros from a single taxpayer or 14,000 euros from multiple taxpayers (in this case the total amount) is a portion of the income obtained by the latter and the rest must exceed 1,500 euros per year).