The income tax treatment of capital income in 2023 could see higher levels, as government proposals consider boosting both earned income and asset taxation to address energy-related costs. Officials have suggested that personal income tax could rise on sources such as checking accounts, mutual funds, stock dividends, insurance, or capital gains. These indications come from sources cited by EL PERIÓDICO, a newspaper aligned with the Prensa Ibérica group.
The coalition agreement between the PSOE and United We Can included a pledge to raise the rate on capital income above 140,000 euros in personal income tax from 23% to 27%. A first step occurred in the 2021 Budgets, increasing capital income taxation from 23% to 26% at 200,000 euros. The current discussions focus on advancing this change to higher rates from lower income thresholds. If the coalition meets this pledge, capital income above 140,000 euros would be taxed at 27%, affecting savers with income up to 200,000 euros and shifting taxation from about 5,600 to 8,000 euros. Because a 26% rate has already been in effect since 2021, the total increase is expected to be smaller. Specifically, moving from 26% to 27% at the 200,000-euro level would raise the tax bill by roughly 2,000 euros for the lowest impacted group.
Expert perspective
These figures should be viewed as reference points if the coalition’s terms are followed strictly, but the final outcome could differ with alternate combinations. Regardless, this potential reform could be part of a broader set of measures the government pursues after Finance Minister María Jesús Montero signaled a temporary and collectible “new tax on great wealth” in 2023.
Personal income tax embodies a twofold approach. First, earned income such as salaries, pensions, and professional or self-employed income is taxed at progressive rates, with the bottom bracket near 19% and the top approaching 54% for the highest earners. Second, capital income is taxed at a comparatively lighter scale, ranging from 19% to 26% (starting at 200,000 euros) for the highest annual sums.
Tax reform in context
The White Paper on Tax Reform, published in March by a government-appointed expert panel, justified maintaining a higher rate on capital income but suggested narrowing the gap with business income. The document argued that as capital income becomes more elastic, the difference between rates should be reduced, while still preserving general rate structures and discouraging conversions of general income into capital income to optimize the tax burden.
Progress on coalition commitments
Under the coalition agreement, the next step on the table is to raise the rate for capital income above 140,000 euros to at least 27%. It also contemplates raising the overall income tax base by two percentage points for earnings above 130,000 euros and by four points for earnings above 300,000 euros. The 2021 Budgets already introduced a two-point increase for the 300,000-euro bracket. The government has previously adopted a system of dual scaling in personal income tax, a feature introduced in 2006 during Jose Luis Rodriguez Zapatero’s administration to soften the impact of capital taxation. Subsequent reforms established a four-bracket structure with rates of 19%, 21%, 23%, and 26% for different tiers of capital income.