Payroll details vary with the number of employees, and February often brings a lower IRPF tax bracket. When something practical happens, inflation remains high, which keeps net salaries higher yet still leaves many people struggling to live in big cities like Barcelona, where the minimum living wage tops 1,500 euros. In practice, some workers earn more than 14,000 euros gross annually, with lower earners sometimes exempt from taxes, while others can reach up to 21,000 euros as changes to withholding from personal work were approved by the State through 2023.
So far, individuals earning between 15,000 and 18,000 euros have benefited from a tax deduction. With the new General Government Budgets, this deduction now covers all taxpayers with a gross annual salary between 15,000 and 21,000 euros. This range aligns with the median Spain wage according to government calculations, meaning roughly half of wage earners gain from the change.
New discount rates are as follows:
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If net income from business is less than or equal to 14,047.50 euros (previously 13,115 euros), the applicable discount rises to 6,498 euros (previously 5,565 euros).
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If net income from business falls between 14,047.50 and 19,747.50 euros, the reduction is calculated as: 6,498 euros minus 1.14 times the amount over 14,047.50 euros (previously 5,565 euros minus 1.5 times the amount over 13,115 euros).
Fixed “jump errors” for rentals up to 35,200 euros
In addition, the Ministry of Finance has corrected withholdings to address “skipping errors” for taxpayers earning between 22,000 and 35,200 euros. With the new table, monthly income tax withholdings for thousands of Spaniards decrease. The reason is that while the withholding change for a person earning 22,000 euros is 1,186 euros, the change for someone earning one euro more is 2,303 euros.
The update must be done by the company.
From a 2023 tax-cut perspective, this payroll adjustment does not significantly benefit or harm workers beyond allowing the State to disburse any personal income tax surplus without delay. The Tax Office has also developed a simulator so individuals can estimate their personal income tax withholding for 2023.
The worker should not take any action to exploit this measure because the update is handled by the employing company. The tax status rule came into effect in February payrolls, retroactive to January. The worker’s main duty is to review the payroll and ensure accuracy. If anything seems off, employees should request their employer to comply with the law.