On February 19, Royal Decree 126/2026, of February 18, was published in the BOE (Official State Gazette), by which The minimum interprofessional wage (SMI) is set for 2026 settling in 1.221 euros per month, lor which represents an annual remuneration of 17.094 euros.
On the same date, Royal Decree-Law 5/2026 was published, which, through Article 28, modifies, with effect from January 1, 2026, Additional Provision 61 of Law 35/2026, on Personal Income Tax. The objective is to reinstate a tax deduction for employment income aimed at taxpayers with low employment income. and avoid the effective taxation of SMI recipients.
Specifically, The deduction will be 590,89 euros when the total employment income is less than 17.094 euros and it will be progressively reduced for taxpayers whose annual income is between 17.094 euros and 20.048,45 euros per year.
However, it should be noted that the deduction will apply when there is no income, excluding exempt income, other than the aforementioned employment income, exceeding 6.500 euros and the amount of the deduction may not exceed the part of the sum of the full state and regional contributions proportional to the net employment income.
At this point, it is worth asking: Is it an effective measure?
While it is true that the deduction will, in practice, leave taxpayers earning up to €17.094 without paying any tax and progressively reduce taxation for those earning above and up to €20.000, without other sources of income, it should also be noted that this measure particularly affects taxpayers who are not required to file an income tax return. This carries the direct risk that There may be situations where, due to lack of knowledge or forgetfulness, they do not present it, and they cannot recover the excess withholdings made on their payrolls.
There are technically more efficient alternatives, such as a reduction in the fee that would allow companies to reduce payroll withholding, generating immediate savings. to these taxpayers and avoiding the financial burden of paying amounts to the tax authorities in advance that will later be refunded.
Another necessary alternative, which we at the main tax organizations have been advocating for years, is to address the updating of the personal and family allowances, as well as the tax scale itself. The failure to adapt to inflation has led in recent years to an increase in the phenomenon known as "cold progressivity," whereby taxpayers bear a heavier tax burden without a real increase in their economic capacity, exacerbating the loss of purchasing power.
Guillermo Camarelles Durá
Associate, Tax Area, Tomarial Abogados.
