The effective average rate of income tax reached 15.1% in 2025, the highest level in history, according to the Tax Agency. Revenue also set records and now accounts for nearly half of the State's tax income.
Spaniards have never allocated such a high portion of their income to the Personal Income Tax (IRPF). In 2025, the effective average rate stood at 15.1%, according to data from the Tax Agency, surpassing the previous high of 12.7% recorded in 2019. This increase of 2.4 percentage points in just six years has driven revenue to record levels, making the IRPF the main engine of the State's tax income.
Total tax pressure, including taxes and social contributions, also reached a new historic high in 2025, nearing 38% of GDP, according to the General Intervention of the State Administration (IGAE). This figure confirms an upward trend affecting most taxpayers, especially those with incomes above the Minimum Interprofessional Wage (SMI).
The Three Causes of the IRPF Record
The increase in IRPF revenue is attributed to three main factors, as explained by the Tax Agency. The first is the rise in taxable bases, driven by job creation and improved economic activity. The second is the increase in the real income of taxpayers, meaning that Spaniards are earning more in real terms. The third, and most controversial, is the so-called "cold progressivity", a phenomenon whereby the effective rate rises without any law approving it, simply because the tax brackets are not updated for inflation.
This last factor has been particularly relevant during the period from 2019 to 2025. According to calculations from the Bank of Spain, of the €23.297 billion in additional revenue collected from IRPF in 2025, around €17 billion is solely due to the lack of adjustment of the tax for inflation. The rest corresponds to the real increase in incomes, mainly from work. Altogether, this increase amounts to just over 1% of GDP, a magnitude similar to the tax increase of 2012 approved by the Popular Party, although with a key difference: that was approved in Parliament, while this is a hidden increase that has not gone through Congress.
Who Pays More and Who Escapes
The impact of this increase is not uniform. Taxpayers with work incomes equivalent to or below the SMI still do not pay IRPF, as was the case in 2019. Furthermore, the SMI has risen from €10,302 annually in 2018 to €17,094 in 2026, a nominal increase of 66% which, after accounting for accumulated inflation of 26%, represents a real gain in purchasing power. These workers have seen little reduction in their disposable income due to IRPF, although they have noticed a slight increase in social contributions due to the Intergenerational Equity Mechanism (MEI).
However, the situation changes drastically for those earning just a bit more than the SMI. For example, a taxpayer who earned €14,290 annually in 2019 paid about €125 in IRPF and €907 in contributions. In 2025, with a similar inflation-adjusted income, their tax bill has skyrocketed. Cold progressivity particularly punishes middle and low incomes that get trapped in higher brackets without their real purchasing power improving.
For high incomes, the increase in the average rate is also notable, although not as sharp in relative terms. In any case, the widespread feeling that salaries are growing less than prices has an objective explanation: disposable income after taxes is decreasing, and that is felt by any citizen with a salary.
A Context of Increasing Tax Pressure
The IRPF record is not an isolated fact. Total tax pressure in Spain has reached 38% of GDP, according to the IGAE, marking a new historic high. This level approaches that of the most heavily taxed countries in the European Union, although the composition of revenues remains different: Spain relies more on direct taxes and contributions than on indirect taxes.
The hidden increase in IRPF has sparked a debate about the need to reform the tax to adapt it to inflation. Meanwhile, taxpayers continue to pay more without any explicit parliamentary decision. For those wanting to calculate the impact on their wallets, the Tax Agency publishes IRPF simulators on its website, where one can check how the effective rate has evolved in recent years.
The next income tax return, corresponding to the 2025 financial year, will be submitted between April and June 2026. It will be then that taxpayers will see firsthand the effect of this historic record on their accounts.
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