The small print of the decrease in personal income tax for salaries less than 35,200 euros


Last week the draft of the reform of the personal income tax regulation prepared by the Ministry of Finance for next year was known. In this document they plan to approve a withholding reduction from 2023when the income tax reduction will come into force, to those who have a income less than 35,200 euros. For this reason, the threshold for applying the reduction, which until now was established at 21,000 euros, is lengthened.

Specifically, the modification will be article 83.2 of the IRPF regulation and it is specified that when the taxpayer obtains a total amount of remuneration not exceeding 35,200 euros per year, the withholding fee will have as a maximum limit the result of apply the percentage of 43% to the positive difference between the amount of the total amount of remuneration and the amount that corresponds, depending on your situation, of the minimum amounts excluded from planned withholding.

Antonio Gallardo, a financial expert at Banqmi, considers that the measure could be very positive in terms of the increase in income that taxpayers will have month after month. Due to the retention adjustment, workers will be able to have a higher salary, “these readjustments are actually relatively common, but it is true that they usually do so due to specific changes such as having a child or an increase in income,” says the specialist.

Beneficiary taxpayers

Since the types and the Tax reduction only affects income of up to 21,000 euros, so when they complete the income statement in 2024 they will have to adjust what they pay to the Treasury. Gallardo points out that “no matter how much later we had the tax reduction that is consolidated in the income statement, the problem in practice is, on the one hand, it must be very fast for it to be consolidated, and on the other, since it is a reduction that would apply to the entire fiscal year, may not even apply to the entirety. remember that it is an exceptional measure“.

For the Banqmi expert, a pending issue that the Treasury must take into account with this reduction are the self-employed. Since they continue to have high retention levels and should give it a spin. “What a self-employed worker earns per year can be very variable. It can be a measure that greatly benefits the wage earner, but leaves self-employed workers aside.” In his opinion, this level of withholdings should drop according to what the tax rate of taxpayers decreases. “It is a tax reduction, but it is required that withholdings be applied and from the first month you can have the benefits. If the measure is done correctly, the impact on the income statement will have to be neutral. As they have advanced the reduction and they retain less, I will not return more money to you,” warns Gallardo.

Therefore, the expert considers that it will not be necessary to save extra money every month to deal with the IRPF adjustment, since every year the programs with which companies indicate the retention based on the worker’s profile are updated. In fact, the taxpayers themselves can use the calculator available at the Treasury to find out the withholding that corresponds to them according to their payroll. “It should not be assumed that in the Income of 2024 the user pays more, unless he makes a quantitative leap due to a job change or any other circumstance that causes you to go over the limit and earn more. In these cases, those who have benefited should be very vigilant.”

That yes, the financial specialist remembers that like every year with the draft of the Rent, the taxpayers must be careful to meet the requirements set and the possibility of having more than one payer. Those who have multiple jobs or change often can be in for some unpleasant surprises, as happened with the ERTE. On the contrary, “those who remain stable in their work and are below those 35,200 euros will have a completely neutral result“, clarifies Antonio Gallardo.


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