Green light for new deflation in IRPF on the community of Madrid. The government of Isabel Diaz Fix it You now have the formula you prepared Also avoid in 2023 the tax explosion caused by tax inflation where the Treasury collects the most.
Therefore, for the second consecutive year, the Executive of the region has begun to process this tax relief so that the residents of Madrid will receive it in their pockets in the next Income Tax return, which corresponds to 2023. Madrid’s 3.5 million taxpayers will save 153 million euros with the new measure.
It should be noted that in times of high inflation like the present, it is the case that a citizen ends up paying additional taxes when his salary is increased (or updated) and proceeds to the next personal income tax bracket (which is higher). However, their purchasing power did not increase due to inflation. This effect is called cold growth and not deducting it from personal income tax represents a tax increase, but through the back door because it will not be noticed by the affected taxpayer.
The government of Ayuso committed to lowering the personal income tax again as long as the annual inflation exceeds 2% this year, it will happen. With this decision, the Community of Madrid became the first of the common regime CCAA (in the Basque Country it was done before) to approve deflation for two consecutive years. The global savings for the taxpayers of Madrid in these two years will amount to more than 350 million euros.
To implement the 2023 deflation, the economic wing of the region decided to apply 3.1% to all income tax brackets, to the personal and family minimum, the current deductions, and their income limit. “The measure of the regional government once again provides families in Madrid with more economic resources, preventing the increase in wages from delivering higher tax payments,” they explained.
In addition to this step, the relief plan of the autonomous section of the personal income tax will continue in this legislature. Although the region is already the territory with the lowest personal income tax in Spain, Ayuso intends to reduce all sections of this tax by another half point, which will mean saving another 355 million euros for citizens. Of course, it won’t be this year. The Ministry of Economy and Finance is watching 2025 as a possible year in which this other reduction can be applied.
Sánchez continued to increase income tax collection
Last year, other regions joined Ayuso’s idea to pay the taxpayer for the damages of inflation, such as Andalusia, the Valencian Community or Galicia. So far, Madrid is the first to announce that it will be repeated this year.
However, despite the inflationary crisis that continues to impoverish citizens, the PSOE and Podemos Government refused to deflate the state share of the personal income tax. Tan The impact of the increase in the prices of this tax is huge for the Treasury the personal income tax income increased from January to August of 7,204 million euros, 9.6% more. At that time, the collection of personal income tax reached 82,505 million euros, an amount that had not been seen before.