Personal Income Tax (IRPF) is a tax levied on employees' income, withheld directly from their paychecks. Its purpose is to advance part of the annual tax payment, thus preventing taxpayers from having to pay the full amount in their paychecks. tax return.
The calculation of personal income tax in the payroll is not uniform for all workers, as it depends on several factors, The tax withholding tax, such as salary, family situation, type of contract and applicable deductions. Knowing how this withholding is calculated and how it affects the flexible compensation - both payroll and the tax return - is essential to understand the net amount you receive each month and to better plan your tax obligations.
IRPF on a payslip is the percentage of gross salary deducted monthly by the company from the employee's salary to be paid directly to the tax authorities. This retention acts as an advance payment of income tax, which is settled annually on the tax return.
The amount withheld will depend on various factors and at the end of the fiscal year, the taxpayer may receive a refund if more than they were due has been withheld, or they may have to pay the difference if the withholding has been insufficient.
IRPF deductions on a payslip depend on:
The Spanish Personal Income Tax (IRPF) withholding system is progressive, which means that the percentage applied increases as the annual gross income is higher. This means that not all income is taxed at the same rate, but is divided into different brackets, each with a corresponding percentage.
Here is the IRPF withholding tax table for the year 2024, where you can see the different income ranges and the percentages applied to each one:
| Personal income tax brackets | Type of retention |
| Up to €12,450 | 19% |
| £12,450 – £20,200 | 24% |
| £20,200 – £35,200 | 30% |
| £35,200 – £60,000 | 37% |
| £60,000 – £300,000 | 45% |
| Over €300,000 | 47% |
There are certain annual income limits below which workers are exempt from income tax withholding. These limits vary depending on the worker's personal and family circumstances:
| Personal situation | Annual income limit |
| Single, widowed, divorced or separated | |
| Childless | Up to €15,947 |
| With a son | Up to €17,100 |
| With two or more children | Up to €17,100 |
| With spouse earning <€1,500 per year | |
| Childless | Up to €15,456 |
| With a son | Up to €16,481 |
| With two or more children | Up to €17,634 |
La Flexible remuneration is an option that allows employees to allocate part of their salary to products or services exempt from income tax, which reduce the tax base and, consequently, the payroll withholding.
Some of the most common benefits that can be included in flexible remuneration are:
When opting for flexible remuneration, the employee It can optimise your net salary, as part of your income will not be subject to income tax withholding. However, it is important to consider that these benefits have a maximum exempt limit and must be managed through the company.
