Spain’s 2025 IRPF update: What you must know before the 2026 tax season

Spain’s tax rules are changing once again – and this time, the tweaks for 2025 could have a real impact on what you’ll owe (or get back) when you file your next Declaración de la Renta in 2026.

From new deductions for low earners to higher taxes for big savers and incentives for going electric, the Spanish government’s latest adjustments to the IRPF (personal income tax) are all about balancing fairness, sustainability and social support. Here’s a breakdown of the five key updates that could shape your finances next year.

€340 Tax Relief for Minimum Wage Earners

If you earn around the minimum wage (SMI) – currently €16,576 per year – there’s good news. Starting in 2025, workers earning below that threshold will be entitled to a €340 tax deduction.

This new measure is meant to make sure that the recent rise in the minimum wage doesn’t leave low-income earners worse off. However, the deduction gradually decreases once your income goes above €16,576, until it disappears entirely for those earning more than €18,276 per year.

For instance, if you earn €16,800, your deduction would fall slightly to about €295, while someone earning €18,000 would still get around €55. It might not sound like much, but for anyone on a low salary or with little tax withheld, that could easily turn into a refund.

Even if your income is below the €22,000 threshold that normally exempts you from filing, experts suggest submitting a tax return anyway — you could be pleasantly surprised when the refund arrives.

Higher Tax Rate for High-Income Savers

If you’re lucky enough to have significant savings or investments, there’s a small but notable change you should be aware of.

Since January 1, 2025, the top tax rate on capital gains and savings income above €300,000 has increased from 28 per cent to 30 per cent. This means that wealthier investors are now paying slightly more on their profits, while everyone else’s rates remain unchanged.

For investors hovering near the €300,000 mark, financial advisers recommend careful planning. For example, if you’ve earned €320,000 in capital gains but still have €40,000 in losses to offset, you could rebalance to stay under the new 30% bracket — and save yourself a few thousand euros.

Pension Plans: The “Golden Window” Opens

A major change is coming for those with pension plans. Starting in 2025, savers are allowed to withdraw funds freely from contributions that are at least ten years old – no need to justify the withdrawal with reasons like unemployment or disability.

And if your contributions date back before 2006, you’re in luck: you can benefit from a 40% tax reduction on lump-sum withdrawals — but only if you act before 2026. After that, this transitional benefit disappears.

This one-year period is being called a ‘golden window’ by financial experts – a rare chance for long-term savers to reduce their tax bill. The smart strategy? Take part of your pension as a lump sum to use the reduction, and then spread out the rest as regular income to avoid jumping into a higher tax bracket.

New Tax Breaks for Artists and Creatives

Spain’s cultural sector is also getting some attention in this reform. Starting next year, artists, writers, performers and audiovisual professionals will be eligible for a 30 per cent tax reduction on exceptional earnings – those years when their income suddenly surges due to a big project or sale.

To qualify, their income in 2025 must exceed 130 per cent of the average income from the previous three years, and the reduction applies up to €150,000.

For example, if your average income from 2022–2024 was €60,000, and in 2025 you earn €110,000, the amount above €78,000 (that’s 130 per cent of your average) would qualify for the 30 per cent deduction.

This measure recognises that many in the creative sector don’t have stable earnings and aims to make taxation fairer for those with irregular income patterns.

Going Electric Pays Off

Finally, if you’ve been thinking about switching to an electric vehicle, 2025 is the year to do it.

The government has introduced a 15 per cent tax deduction for anyone who buys an electric car costing less than €45,000, as long as the purchase and payment are completed within the 2025 calendar year.

The same deduction also applies to the installation of a charging point at home – whether in your main residence or a rental property. Just make sure your paperwork is in order: you’ll need invoices and a technical installation certificate to qualify.

Spain’s 2025 IRPF reform is a mix of incentives, opportunities, and a few extra costs for the wealthiest taxpayers. Whether you’re a worker on minimum wage, a pension saver, or an investor, taking a moment now to understand these changes could save you real money when tax season comes around in spring 2026.

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