The Valencian Community continues to make progress in reducing regional taxation, in a process that has undergone significant changes since 2023 and has been expanding in recent years.
Following the publication on August 10th of Law 5/2026, of July 31st, on fiscal, administrative and financial management measures, and organization of the Generalitat, we provide you with a brief summary of the modifications to the four tax figures in the Valencian Community.
The 2026 reform should therefore be analyzed as a continuation of a previously initiated process. Regarding inheritance and gift tax, the main turning point occurred in 2023, when Law 6/2023 established a 99% tax credit for certain acquisitions made by family members in groups I and II.
In 2025, this system was modified again, raising the minimum exemption from Wealth Tax from €500.000 to €1.000.000. Now, Law 5/2026 further expands these benefits.
The main novelties are the following:
1. Personal Income Tax
Effective January 1, 2026, the marginal rates of the regional personal income tax scale will be reduced, ranging from 8,8% to 29,35%. These reductions apply not only to the lowest income brackets but also to those exceeding €40.000.
The reduction affects the different tax brackets and represents a decrease in rates compared to those previously applicable. Furthermore, the regulation anticipates a further reduction by 2027, when rates will range between 8,7% and 29,25%.
For the year 2027, there is a decrease of 0,10% for all brackets, compared to the rates set in 2026.
| LIQUIDABLE FOUNDATION | Type 2025 | Type 2026 | DOWNHILL 26-25 | Type 2026 | Type 2027 | DOWNHILL 27-26 |
| € | 9,00 % | 8,80 % | 0,20 % | 8,80 % | 8,70 % | 0,10 % |
| 12.000,00 € | 12,00 % | 11,70 % | 0,30 % | 11,70 % | 11,60 % | 0,10 % |
| 22.000,00 € | 15,00 % | 14,60 % | 0,40 % | 14,60 % | 14,50 % | 0,10 % |
| 32.000,00 € | 17,50 % | 17,00 % | 0,50 % | 17,00 % | 16,90 % | 0,10 % |
| 42.000,00 € | 20,00 % | 19,40 % | 0,60 % | 19,40 % | 19,30 % | 0,10 % |
| 52.000,00 € | 22,50 % | 21,90 % | 0,60 % | 21,90 % | 21,80 % | 0,10 % |
| 62.000,00 € | 25,00 % | 24,40 % | 0,60 % | 24,40 % | 24,30 % | 0,10 % |
| 72.000,00 € | 26,50 % | 26,10 % | 0,40 % | 26,10 % | 26,00 % | 0,10 % |
| 100.000,00 € | 27,50 % | 27,35 % | 0,15 % | 27,35 % | 27,25 % | 0,10 % |
| 150.000,00 € | 28,50 % | 28,35 % | 0,15 % | 28,35 % | 28,25 % | 0,10 % |
| €200.000,00 | 29,50 % | 29,35 % | 0,15 % | 29,35 % | 29,25 % | 0,10 % |
2. Wealth Tax
One of the most relevant measures of the reform affects the minimum exemption of the Wealth Tax.
Law 5/2025 had already raised this minimum from 500.000 to 1.000.000 euros with effect for the 2025 financial year. Law 5/2026 takes a further step and raises it to 2.000.000 euros.
This measure exempts the vast majority of middle and upper-class wealth in the region from taxation, limiting the tax only to the highest fortunes and curbing the flight of taxpayers to other autonomous communities.
3. Inheritance and Gift Tax
First, it's worth remembering that, since June 1, 2026, a 25% tax credit has been in effect for both inheritances and gifts made by relatives in Group III (siblings, uncles/aunts, and nephews/nieces by blood). This credit will increase to 50% from June 1, 2027, allowing for reduced taxation among Group III relatives.
Law 5/2026 expands the scope of certain tax benefits applicable to the transfer of businesses, professional practices, shares in entities, and agricultural enterprises, extending them to direct and collateral relatives up to the fourth degree, in the cases provided for by law. This expansion strengthens tax incentives for family businesses and facilitates generational succession planning.
Regarding inter vivos gifts, the tax incentives linked to the transfer of businesses, professional practices, and shares in entities to relatives up to the fourth degree of consanguinity are also extended, under the terms established by law. Furthermore, the formalization of certain small-value gifts is simplified: monetary gifts or gifts of privately owned vehicles up to €4.000 can be documented by a private agreement with a qualified digital signature, as an alternative to a public deed.
4. Property Transfer Tax and Stamp Duty
These modifications also introduce changes to the Property Transfer Tax and Stamp Duty, including a reduced rate of 0,1% in certain cases under the Stamp Duty modality. Specifically, this rate applies to the first copies of public deeds documenting the acquisition of a primary residence, as well as to certain deeds establishing or modifying real estate guarantees.
A progressive evolution of Valencian taxation
The modifications introduced in 2026 consolidate the evolution of the fiscal policy of the Valencian Community towards a model of Lower taxation and greater appeal for families, wealth, and businessesThe reduction of the regional scale of the Personal Income Tax, the increase in the minimum exemption in the Wealth Tax and the expansion of incentives in Inheritance and Donations, including direct and collateral relatives up to the fourth degree, reinforce this trend.
Taken together, these measures favor the Estate planning, generational succession, and the continuity of the family business, placing the Valencian Community among the autonomous communities with a more favorable tax framework in these areas.
Furthermore, from a doctrinal perspective, the law remains open to debate on the inequality of residence between autonomous communities and possible appeals of unconstitutionality, so these new benefits must be applied with maximum prudence and strict formal compliance.
Maria Ballesteros
Tax Area
