The Technicians of the Ministry of Finance, Gestha, believe that the Draft Royal Decree that will set the minimum interprofessional wage (SMI) for 2027 at €18,004 without taxation will entail the Government approving a Royal Decree-Law that increases the deduction for income from work to €1,033.66 from the €590.89 currently in force in 2026, with which single workers without personal or family burdens will not be taxed on their income tax.
The technicians point out that if the current structure is maintained to avoid the jump error, the deduction will gradually decrease for higher salaries until it is exhausted for salaries above €23,172.26. If this is the case, Gestha estimates a cost to the public treasury that would be around €1.1 billion, about €700 million more than in 2026.
In the technicians' opinion, the deduction in quota is an appropriate mechanism to avoid the taxation of the SMI, without the regressive effects of reductions in basis, in addition to minimising the impact on public accounts, since not all individuals can exhaust the deduction due to having greater personal and family burdens, other deductions, or insufficient income.
In this regard, the technicians advocate for a major political agreement for the exemption of salaries and incomes up to the amounts of future updates of the SMI, also considering the modification of the different elements of the income tax, given that it has been years without updating the reductions for income from work, nor deflating the scale and minimums of the income tax.
Thus, they request to extend this deduction to pensioners and unemployed individuals, whose benefits are also income from work, as they do not understand why the taxation of workers is eliminated and not for these two groups with incomes up to the new SMI, additionally stating that it would have a very low additional cost given the higher amounts of personal minimums due to age or disability, as well as for the unemployed who usually will not exceed €18,004 annually, the threshold of the new SMI.
Gestha states that leaving the SMI untaxed is the amount that least increases business costs both due to salaries and due to the increase in the minimum bases of social contributions, which in the medium term could bring the positions of Labour and the CEOE closer together.
