Changes in payroll will be effective from this February payroll

One of the main fiscal measures contemplated in the general state budget for 2023, approved last December, was an increase in the limit of annual gross salary subject to personal income tax (IRPF). This increase raised the limit from 14,000 euros to 15,000 euros. However, this was not the only solution accepted. Another one of the most notable has been Notable in the month of February With increase in salary.

In this sense, a reduction in the withholding of personal income tax (IRPF) was established in the same budgets. The exemption will apply to those whose gross income is less than 22,000 euros per year. According to government estimates, this amount represents the average salary in Spain and will benefit about half of salaried workers.

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The deduction for income derived from work has been extended to taxpayers who meet the requirements set out in the law. Thus, the new amounts are as follows:

• If the net return on labor is Equal to or less than €14,047.50 The amount of the applicable deduction is €6,498.
• If net income from work is included Between €14,047.50 and €19,747.50The applicable reduction is derived from the following calculation: €6,498 less than the result of multiplying the difference between work performance and €14,047.50 by 1.14.

As part of the amendments, Article 85.3 of the Individual Income Tax Regulations (IRPF), which addresses the withholding rates applicable to labor income, has also been amended. This update extends the adjustment to withholding for taxpayers who earn between 22,000 euros and 35,200 euros per year. The purpose of this measure is to avoid “jump errors” that occur when a taxpayer’s income slightly exceeds a threshold in a year, take them to a higher level Progressive scale of personal income tax.

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It is important to note that only the withholding rate has been adjusted, not the tax rate, which means the amount of tax payable will remain the same. In other words, by reducing retentionwill also reduce A potential refund to be requested in the income tax return for the year 2023, which will be submitted in 2024.

The responsibility of adjusting these withholdings falls on the companies. Furthermore, all citizens can verify this information through the online simulator available in the Treasury. to calculate withholding of personal income tax for the year 2023.

Tax withholding, including minimum individual income tax (IRPF) withholding, is determined according to the IRPF bracket tables that the tax agency establishes annually. These fragments grow slowly and accumulate over time. Therefore, a fixed percentage is not specified for a specific amount of income, but rather a percentage corresponding to the previous sections is added as the income moves up the scale.