The Spanish government announces a reduction in personal income tax
On Thursday, the Spanish government approved a new two-year fiscal package that will come into force in 2023 which includes a reduction in personal income tax for those earning less than 21,000 euros a year, a temporary tax on the very rich, and changes to company taxes.
The Minister of Finance for Spain, María Jesús Montero, explained that until now the reduced rate of income tax has only applied to people with an annual income of less than 18,000 euros, but the limit is being raised to 21,000 euros.
Also, those whose income is under 15,000 euros will be exempt from this tax altogether, and anyone who earns over 200,000 euros a year will pay an extra one per cent: 27% instead of the present 26%.
These new measures will also affect people whose total wealth is more than three million euros, as a new and temporary tax is being introduced, which will have three brackets ranging from 1.7% to 3.5%.
When will the rate of personal income tax change?
This new fiscal package is part of the 2023 Budget and will take effect from 1st January 2023 until the end of 2024. The government estimates that the reduction in personal income tax will save taxpayers a total of 1.8 billion euros over the next two years.
These new measures will not affect annual tax returns for 2022, because the existing rules continue to apply until the end of this year.
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