The Madrid Assembly has given the green light for the second consecutive year to the deflation of the regional scale of the Personal Income Tax (IRPF). This measure, which will apply a 3.1% adjustment, equivalent to the average increase of the CPI during the first eight months of 2023, will be in effect in the upcoming Income Tax declaration.
The deflation of the Personal Income Tax will impact 3.5 million residents and is estimated to result in a savings of 153 million euros for taxpayers. Rocío Albert, Minister of Economy, Finance, and Employment, supported the measure, highlighting it as fair and timely, especially for the benefit of lower incomes.
According to the report from the Ministry of Economy, Finance, and Employment, the deflation will have a more significant impact on lower incomes. A person under 65 with gross annual income of 25,000 euros and two children (one under three years old) will experience a 4.08% savings compared to 2022 thanks to this measure.
For middle-class individuals with labor income of 32,000 euros, the savings will reach 2.47%, while for those with higher incomes (90,000 euros), the percentage will be 1.72%.
In a session held during the December holiday season, the Madrid Assembly approved the partial recovery of the Wealth Tax. The intention of this measure is to retain the collection of the Wealth Tax from the central government’s Solidarity Tax on Large Fortunes in the autonomous community. The tax reduction on Wealth Tax will be adjusted for those affected by the state measure, preventing the state from collecting directly.
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