Catalonia to cut income tax for most workers in 2024
If you pay tax in Catalonia you could be more than one of 2 million workers in the region due for a tax cut in 2024.
The Catalan Generalitat is preparing to cut the regional part of personal income tax (known as IRPF in Spain, something partly controlled by regions and partly by the central government) that will benefit taxpayers with incomes of up to €33,000 gross per year.
According to La Vanguardia and sources from the Department of Economy, the Generalitat plans to cut the rate of the regional scale in the first tax bracket by one percent: from the current 10.5 percent to 9.5 percent.
With this change, the minimum tax rate for low earners (from €12,450) when combined with the national rate, would go from 20 percent to 19 percent overall.
To take an example, for someone earning €24,900 gross per year, half of their income would be taxed at 9.5 percent by the national government, and the other half, taxed by the Generalitat, would go from 10.5 percent to 9.5 percent, giving estimated savings for the taxpayer of €125.
READ ALSO: LISTED: The taxes that will increase in Spain in 2024
With this change, Catalan taxpayers with lower incomes would no longer pay the most in the regional system. According to data from the Índice Autonómico de Competitividad Fiscal, which measures regional rates, in 2023 Catalonia was, for the second consecutive year, the region where the most taxes were paid.
The proposed tax cut is still in the draft law stage for the Generalitat's 2024 budget, and the measure would still need to be supported by the rest of the regional parties in the Catalan parliament, something that is not a given.
This tax cut would benefit almost 3/4 of all taxpayers in the region (73 percent), which is around 2.6 million people. For other Catalan taxpayers, the measure will have a neutral impact, since tax rates in other scales would be adjusted slightly upwards so that people making more than €33,000 a year continue to pay the same as before.
Another of the measures proposed by the Generalitat is to reduce the overall number of personal income tax brackets from the current nine to eight. With that change, it is intended that smaller inflation-adjusted pay rises will not cause taxpayers to move up a bracket and end up paying a higher rate.
Although the Generalitat is hoping to approve the tax cut for its 2024 budget, it would not actually come into force until the following budget when taxpayers make their annual income tax return. However, it would be implemented retroactively from January 1st.
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The Catalan Generalitat is preparing to cut the regional part of personal income tax (known as IRPF in Spain, something partly controlled by regions and partly by the central government) that will benefit taxpayers with incomes of up to €33,000 gross per year.
According to La Vanguardia and sources from the Department of Economy, the Generalitat plans to cut the rate of the regional scale in the first tax bracket by one percent: from the current 10.5 percent to 9.5 percent.
With this change, the minimum tax rate for low earners (from €12,450) when combined with the national rate, would go from 20 percent to 19 percent overall.
To take an example, for someone earning €24,900 gross per year, half of their income would be taxed at 9.5 percent by the national government, and the other half, taxed by the Generalitat, would go from 10.5 percent to 9.5 percent, giving estimated savings for the taxpayer of €125.
READ ALSO: LISTED: The taxes that will increase in Spain in 2024
With this change, Catalan taxpayers with lower incomes would no longer pay the most in the regional system. According to data from the Índice Autonómico de Competitividad Fiscal, which measures regional rates, in 2023 Catalonia was, for the second consecutive year, the region where the most taxes were paid.
The proposed tax cut is still in the draft law stage for the Generalitat's 2024 budget, and the measure would still need to be supported by the rest of the regional parties in the Catalan parliament, something that is not a given.
This tax cut would benefit almost 3/4 of all taxpayers in the region (73 percent), which is around 2.6 million people. For other Catalan taxpayers, the measure will have a neutral impact, since tax rates in other scales would be adjusted slightly upwards so that people making more than €33,000 a year continue to pay the same as before.
Another of the measures proposed by the Generalitat is to reduce the overall number of personal income tax brackets from the current nine to eight. With that change, it is intended that smaller inflation-adjusted pay rises will not cause taxpayers to move up a bracket and end up paying a higher rate.
Although the Generalitat is hoping to approve the tax cut for its 2024 budget, it would not actually come into force until the following budget when taxpayers make their annual income tax return. However, it would be implemented retroactively from January 1st.
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