Personal Income Tax (IRPF) is one of the most important tax obligations for taxpayers in our country.
Every year, this tax undergoes changes that can significantly affect our personal finances. In this complete guide to IRPF in 2024, we will look at everything from the basics to strategies for optimising it, along with what’s new this year and frequently asked questions that every taxpayer should know.
Understanding Personal Income Tax: Basic Concepts
Personal income tax becomes a familiar concept from the very first moment we start working. We see it reflected in our paycheck every month, but what exactly is it? IRPF is a direct tax on income earned by individuals. This includes salaries, income from work, movable and real estate capital, economic activities, etcetera. It is vital to understand how this tax works in order to comply with our tax obligations properly.
IRPF brackets 2024: How do they affect you?
The IRPF brackets determine the amount of tax we have to pay depending on our income. Normally, the more you earn, the more tax you will have to pay in relation to your income.
In 2024 there has been an increase in the Minimum Interprofessional Wage (SMI), which has led to a change in the IRPF brackets for this year.
Table of personal income tax brackets 2024
Table of personal income tax brackets 2024
Below is the table of personal income tax brackets for the tax year 2024:
| Income | Withholding |
| From 0 to 12.450€ | 19% |
| From 12.450€ to 20.199€ | 24% |
| From 20.200€ to 35.199€ | 30% |
| From 35.200€ to 59.999€ | 37% |
| From 60.000€ to 299.999€ | 45% |
| Over 300.000€ | 47% |
Practical examples: Calculating your personal income tax
In this section we will look at a practical example that will shed light on how we should calculate our personal income tax in 2024:
Let’s assume that John, an employed person, single and without children, has a gross annual salary of €30,000 in the tax year 2024. First, we need to calculate the taxable base, which is the gross salary minus applicable deductions.
- John’s gross annual salary: €30,000.
- Applicable deductions:
- Deduction for single worker without children: personal and family minimum of 5,550 euros.
- Calculation of the taxable base:
- Net taxable income = Gross annual salary – Applicable deductions
- Net base = 30,000 euros – 5,550 euros
- Net taxable income = 24,450 euros
Now, using the table of personal income tax brackets for 2024 and taking into account that John is not taxed on the total of his income at the highest withholding rate, but rather, starting with the lowest percentage, these are applied one by one, we can calculate the tax payable:
- For the first €12,450, a tax rate of 19% is applied.
- For the next €7,750 (€20,200 – €12,450), a tax rate of 24% is applied.
- The rest of the taxable base, which is €4,500 (€24,450 – €20,200), is taxed at 30%.
If we make these calculations:
Tax = (12.450€ x 0.19) + (7.750€ x 0.24) + (4.500€ x 0.30)
Tax = 2.365,50€ + 1.860€ + 1.350€.
Tax = 5.575,50€.
Therefore, the income tax payable by John in 2024 would be €5,575.50.
It is important to remember that this is only a simplified example and that the actual calculation of personal income tax may vary depending on the personal situation of each taxpayer and the specific deductions applicable in their case. Therefore, we recommend that you consult a tax professional to obtain an accurate and appropriate calculation for your individual situation.
What’s new in Personal Income Tax for 2024
Every year, personal income tax undergoes changes that can have a significant impact on our finances. In 2024, several new features have been implemented that are crucial to be aware of.
The most important change has to do with the Minimum Interprofessional Wage (Salario Mínimo Interprofesional). In 2024 the SMI has risen to 1,134 euros per month in fourteen payments, which has also increased the minimum exempt in the IRPF, which goes from 15,000 euros per year in 2023 to 15,876 in 2024, which means that all individuals with a lower annual salary will not have to pay the IRPF.
It should be noted that, for example, workers earning 18,500 euros/year, which is the most common salary in Spain, will pay 1,128 euros of IRPF in 2024, which is a difference with respect to the 2,000 euros they had to pay in 2018.
One of the groups that will benefit most from these changes are pensioners who receive low or medium pensions. For example, a retired person with a pension of 17,000 euros a year will have to pay 224 euros compared to the more than 1,400 euros they paid in 2018.
How to calculate your personal income tax withholding on your paycheck
One of the most common doubts that arises for us as workers is to know what the correct IRPF withholding on our pay cheque is. To do this, it is vital to take into account the individual circumstances of each person, as not all workers in a company have the same personal situation.
Useful tools and calculators
Nowadays, thanks to the Internet, we can calculate the percentage of personal income tax withholding that corresponds to us in our paycheck, taking into account our particular situation. However, we recommend that you use calculators from reliable or official websites such as the one available on the Tax Agency’s website.
Another option is to contact an account manager, who will be able to advise you, taking into account your personal circumstances, and to whom you can ask any questions you may have.
Factors that influence your withholding
As mentioned above, there are several personal circumstances and factors that influence the percentage of income tax withholding that should appear in your paycheck.
One of them is the gross annual salary, as the higher the salary, the higher the withholding, since the higher the income, the higher the tax. Another factor to take into account is the type of contract you have: temporary, indefinite, permanent… The degree of disability, if you have one, and your family situation also have an influence: for example, your withholding will not be the same if you are single as if you have children or are a single-parent or large family.
Strategies to optimise your personal income tax
Optimising your personal income tax is key to maximising your net income and minimising your tax burden. Here are some strategies that you may find useful:
Applicable deductions and reductions
There are people in certain situations and different factors that allow us to apply certain reductions and deductions in personal income tax. Knowing about them allows us to reduce the amount of tax to be paid, thus making the most of the tax benefits available.
One of the most innovative deductions is that for the purchase of electric vehicles, as you can deduct up to 15%. If you decide to renovate your home, you can deduct up to 60%, and you can also benefit from a deduction in personal income tax if you are self-employed and have employees under your charge.
Another of the most important deductions is the maternity deduction, which allows people with children under three years of age to pay up to 1,200 euros less tax per child.
Tax planning: tips and recommendations
Tax planning is a key strategy for optimising personal income tax and minimising the tax burden in a legal and ethical way. Here are some tips and recommendations for effective tax planning in the context of personal income tax in 2024:
- Familiarise yourself with the tax deductions available, such as those related to housing, education, health, and donations to NGOs, and make the most of them.
- Plan your income and expenses so that you can strategically allocate them throughout the tax year to optimise your tax obligations.
- Use tax tools and calculators to estimate the impact of different scenarios on your tax return and make informed decisions.
- Use a tax advisor or accountant to get personalised guidance on the best tax planning strategies for your financial and employment situation; a qualified professional can help you identify tax-saving opportunities and avoid potential mistakes that could result in penalties.
Frequently asked questions about Personal Income Tax in 2024
How does the change of personal situation affect personal income tax?
Changes in our personal situation, such as marriage, the birth of children, or a change of residence, can have an impact on the calculation of personal income tax. If you have any doubts about how this may affect your finances, we recommend that you consult a professional.
How do investments affect the calculation of personal income tax?
Investments can have significant personal income tax implications, depending on the type of investment and the returns obtained. In general, your investments will be taxed as savings income.
What should I do if I have paid more personal income tax than I should?
If you have paid more tax than you should have, your income tax return will be refunded.
How are the regional income tax brackets applied?
In Spain, the Autonomous Communities have power over 50% of Personal Income Tax, which means that they can modify the tax rates and include new tax brackets. The best thing to do is to get information from an official entity in your Autonomous Community or ask an advisor to advise you within your Autonomous Community.
Conclusions
Personal Income Tax is a complex tax that requires attention and understanding by all taxpayers. We hope that this complete guide to Personal Income Tax in 2024 has been useful to clarify doubts and provide tools for a more efficient financial management. Remember to always consult a tax professional for personalised advice according to your specific situation.
