How will it affect workers who earn the minimum wage that must be taxed through personal income tax?

BarcelonaThe decision to tax the minimum interprofessional salary (SMI) by personal income tax has led to a Political clash between PSOE and Sumar. But what are they arguing about? At the end of January, the Minister of Labor, Yolanda Díaz, announced a 50 euro increase in the minimum wage per month. In this way, it went from 1,134 euros per month in 2024 to 1,184 this year – over 14 payments – after reaching an agreement with the majority unions, CCOO and UGT, which did not have the approval of the CEOE employers' association. However, this increase has not been the point of tension. The discussion comes from the refusal of María Jesús Montero, Minister of Labor, not to raise the minimum exempt from personal income tax so that those who earn the minimum wage are exempt.

In other words, the clash comes because Montero's decision that from now on all people who earn the SMI and do not have any type of tax deduction will have to pay income tax. This is quite a novelty: until now, despite the continuous increases in the minimum wage in recent years, they had always been exempt from paying taxes with them. The latest example is from 2024 itself, when by raising the SMI to 15,876 euros per year, the figure that was exempt was updated to exactly the same value. This year, therefore, the 15,876 euros exempt will not be revised, remaining below the 16,576 euros that the 14 payments of the new SMI add up to, approved yesterday in the council of ministers.

How does the increase in the SMI affect the income tax return?

However, the impact that this decision will have on workers' pockets will vary depending on the case. To exemplify the amount that taxpayers who receive the SMI will have to pay, the ARA has simulated different situations on the Tax Agency's portal that will involve different amounts. It is important to note that the following figures only take into account the state tax bracket. In Catalonia, as well as in other autonomous communities, community brackets are paid that are not included in the following calculations.

• Example 1: A single, divorced or widowed person with a child over 3 years of age exclusively in their care. Total to pay: 0 euros.
• Example 2: A single, divorced or widowed person with a child under 3 years of age who is solely in their care. Total to be paid: 0 euros.
• Example 3: A married person whose partner earns less than 1,500 euros per year. Total to be paid: 0 euros.
• Example 4: A person in any situation other than the above, with a child over 3 years old. Total to be paid: 99.46 euros per year.
• Example 5: A person in any situation other than the above, with a child under 3 years old Total to pay: 0 euros.
• Example 6: A person in any other situation than the above, without children. Total to be paid: 300.03 euros per year.

As we have seen through the examples, there are several profiles of people who earn the minimum wage who will continue to be exempt from paying personal income tax in 2025. In fact, according to calculations by the SMI expert committee, taxation will end up affecting some 500,000 workers throughout the State. "The important thing is to guarantee that the salary received by workers who earn the SMI is around 60% of the average salary, and that is currently being fulfilled. What progressive and left-wing forces cannot do is stigmatize taxes," said sources from the portfolio led by María Jesús Montero.

The progress of the SMI

In the last decade, the minimum wage in Spain has taken a giant leap. In fact, the 1,184 euros achieved this year almost double the SMI that had been set in 2015, when it stood at 655.20 euros per month. However, the key year of any escalation was in 2018, when it was increased by 22.3% and rose to 900 euros per month. These increases have caused problems in recent years with the CEOE employers' association, which has not participated in the agreements that have been reached with the majority unions.