Madrid, 6 November 2026. The Spanish government intends to update the tax relief for people earning the Salario Mínimo Interprofesional (SMI) so that the increase planned for 2027 continues to be exempt from income tax (IRPF). According to the Finance Ministry, the necessary Real Decreto-Ley is to be approved by the Consejo de Ministros before the general election on 29 November.
The SMI is to rise by 5.3 per cent in 2027 to €1,286 per month in 14 payments. This is equivalent to €18,004 gross per year, an increase of €910 on the previous annual total. Without changes to the current IRPF rules, employees earning the SMI would become liable for tax or face higher deductions as a result of their higher gross pay. Finance Minister Arcadi España reiterated in an interview that the minimum wage should “not lead to IRPF payments” and said this approach would continue.
The government is preparing an update to the existing special IRPF deduction for low incomes. This would ensure that, after allowances and deductions are taken into account, the new SMI level remains effectively tax-free. The plan is formally to adopt the Real Decreto-Ley at one of the last regular meetings of the Council of Ministers before the election. Given that the consultation on the SMI decree is under way and scheduled to run until 16 November, the meetings on 17 or 24 November are currently the most likely options. During this interim period, the Diputación Permanente of Congress would be responsible for ratifying it.
Trade unions support combining the wage increase with tax relief, as it helps protect purchasing power at the lower end of the pay scale. Employers’ associations oppose the SMI increase and warn of the burden on smaller businesses; in their view, the planned tax measures do nothing to change the impact on labour costs. In the political debate, opposition parties portray the proposal as an election ploy, while the government presents it as a necessary follow-up measure to prevent unintended tax burdens.
Legally, a Real Decreto-Ley may be used when urgent regulation is needed, but it is subject to subsequent parliamentary scrutiny. Whether, and in what precise form, the change will be made will be decided by the Council of Ministers. Until then, the executive’s statements and plans remain just that; the law will change only once the decree is published and ratified.
Editor: Daniel Mayer (Article created with AI assistance).