B Law & Tax
31 August 2023

Tax advisor: The Personal Income Tax for retirees according to the Tax Authorities

The increase in pensions, for the most part, is highly beneficial for retirees. However, this implies a proportional increase in the tax burden. Retirement pensions are not tax exempt and the Tax Agency will require a higher percentage of IRPF due to the increase in Social Security benefits.

This year, pensions based on contributions have experienced an increase of 8.5%, while non-contributory pensions have risen by 15%, after this increase was approved the previous year. In addition to affecting pensioners’ income, this measure has also had a direct influence on Personal Income Tax (IRPF) taxation and how it is reflected in the Income Tax Return. As a result, pensioners will now face an increase in the IRPF percentage applied to their contributory pensions.

Personal Income Tax withholdings

The withholding percentage is based on the personal situation of the pension beneficiary, but an amount has been established according to the amount of the benefit:

– Up to 12,000 euros: 1% IRPF.

– 12,000 – 18,000 euros: 2.61%.

– 18,000 – 24,000 euros: 8.69%.

– 24,000 – 30,000 euros: 11.83%.

– More than 30,000 euros: 15.59%.

Pensioners who receive more than 22,000 euros gross per year must file the Declaration, as well as those who exceed 15,000 euros and obtain income from two different sources. As for pensions for absolute permanent disability or great disability, they will be exempt for residents according to the IRPF law.

B Law & Tax International Tax & Legal Advisors.


“En B LAW&TAX somos especialistas en asesoramiento fiscal internacional tanto a empresas como para particulares. Si desea ampliar la presente información, estaremos encantados de poder atenderle en el 917817194 o en [email protected]