Every beginning of the year it is time to recalculate the Personal income tax withholdings on the payroll that the company will apply each month. These withholdings are an advance that is made to the Tax Agency on account of the personal income tax result. If the withholdings are well calculated, there will be no need pay taxes when making the rent because all the necessary money will have already been advanced.
However, this is usually not the case. The calculation of personal income tax withholdings is not an exact science, nor does it take into account all the income variables, such as the deductions you can apply and other strategies to pay less taxes.
The translation is that the income result will normally be different from what they have withheld from you. If in the end they retained you too much, they will return the difference and if they retained you too little, you will have to pay.
Although economists differ, what most people look for when faced with income is the peace of mind that they will not have to pay and that is achieved adjusting personal income tax withholdings.
How personal income tax withholdings are calculated
The first key to determining the minimum Personal Income Tax on payroll so that the Income does not pay you in 2025 is to be clear about how withholdings are calculated.
Payroll withholdings They depend on your salary, personal and family situation and the type of contract and its duration.
For example, temporary contracts only have a withholding of 2% and thus it is easy for the income result to be paid later. The same happens with other special cases such as when you have two jobs or change jobs mid-year, as we will see later.
Beyond these situations, what determines how much they will retain you are the personal income tax tables, which work progressively and are the following:
- From 0 to 12,450 euros: 19% withholding.
- From 12,450 to 20,199 euros: 24% withholding.
- From 20,200 to 35,199 euros: 30% withholding.
- From 35,200 to 59,999 euros: 37% withholding.
- From 60,000 to 299,999 euros: 45% withholding.
- More than 300,000 euros: 47% withholding.
It must be remembered that the personal income tax It is divided into a state part and an autonomous part. These tables represent the state part and, therefore, only 50% of the personal income tax result.
From there, each autonomous community can establish its own income brackets (most do).
The tax-exempt limit and withholdings
The personal income tax includes a tax-exempt limit of 15,876 euros, in line with the current Minimum Interprofessional Wage or SMI and whose increase has yet to be confirmed.
If the SMI finally increases by 5% to 1,190.7 euros per month, the exempt limit could also rise to 16,666.8 euros, although that is something that has yet to be determined.
Thanks to this minimum income tax exemption, Those who earn less than that amount will not have personal income tax withholdings or the minimum of 2% will be applied.
If these people were obliged to declare, the result could be to pay. What happens is that taxpayers with income below that threshold do not usually have to file personal income tax.
In this sense, remember that The limit to be exempt from paying income is 22,000 euros with a single payer or 15,000 euros with two or more payers. if more than 1,500 euros have been collected from the second and subsequent payers.
In addition, those who have more than 1,600 euros of profits from their investments or 1,000 euros of imputed real estate income must also pay the income.
What percentage of withholding do you need to avoid paying rent?
The answer will depend on your personal situation. The reality is that there is no universal percentage Valid for everyone because personal income tax depends on your personal circumstances.
If you want to find your figure, you just have to:
- Ask your company about your withholding or use the Treasury model 145 simulator to find out.
- Use the AEAT income simulator to anticipate what the personal income tax result would be.
- Ask to increase your personal income tax withholding to cover the difference between the two.
This is the basic formula. Furthermore, there are A special case where you will surely pay the rent: when you have two jobs or have changed jobs.
What happens in these cases is that Each company will calculate payroll withholding based on the salary he pays you, not the aggregate of all your income. As a result, the withholding will always be lower and the result of the personal income tax to be paid.
Is it advisable to adjust the withholding so as not to pay the Treasury?
From a strictly financial point of view the answer is negative.
Withholdings are an advance of money to the Treasury at zero cost. Think of it as an interest-free loan that you make to the Treasury or as a deposit with which they do not pay you interest either. Would you lend money to the bank under those same conditions?
In addition, you can make the money you keep in your pocket profitable through products such as paid accounts or monetary funds.
So, why do so many people prefer that personal income tax not be paid at the expense of increasing withholding? It’s more about the peace of mind of not having to deal with a mid-year payment.
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