The 2025 Income Tax return campaign began on April 8, 2026 and among the new features that thousands of taxpayers can now apply is the new deduction for earning income from work. This measure was incorporated by Law 5/2025, published in the Official State Gazette, and allows a reduction of up to 340 euros in personal income tax for workers with full income from work of less than 18,276 euros per year, provided that they also do not exceed certain income limits.
Although the rule was published on July 25, 2025, the modification of personal income tax included in its third final provision takes effect from January 1, 2025. Therefore, this tax benefit can already be reflected in the declaration corresponding to the 2025 financial year that is now presented to the Treasury.
To be able to access this deduction, the law requires that two conditions be met at the same time. The first is to have full earnings from work of less than 18,276 euros per year derived from an effective employment or statutory relationship. The second is not having obtained other non-exempt income, other than that from work, above 6,500 euros per year. This group may include, for example, rents, bank interest or capital gains.
However, the amount is not the same for all workers who meet the requirements. The Treasury explains that the amount depends on the exact level of income. Thus, those who earn less than 16,576 euros per year may apply the maximum deduction of 340 euros. On the other hand, when the salary is between 16,576 and 18,276 euros, the amount will be reduced progressively. The planned formula consists of subtracting 0.2 euros for each euro that exceeds 16,576 euros. Once the threshold of 18,276 euros is reached, the deduction disappears.
As a summary, this is the table of sections and amounts.
| Full annual work returns | Deduction applicable in the personal income tax rate | Requirements |
|---|---|---|
| Less than 16,576 euros | 340 euros | Not have other non-exempt income exceeding 6,500 euros |
| Between 16,576 and 18,276 euros | 340 – (0.2 x (labor income – 16,576)) | Same requirement |
| From 18,276 euros | 0 euros | Deduction does not apply |
The Tax Agency itself also remembers that this tax reduction has a limit. The amount of the deduction cannot exceed the part of the sum of the full state and regional contributions that corresponds proportionally to those net income from work. This means that the full theoretical amount will not always be charged, since it will also depend on the fee resulting from the declaration.
An example to understand how the deduction works in the Income Tax return
To see how this measure is applied in practice, a worker with a gross annual salary of 16,800 euros can be taken as an example. As this figure exceeds the first tranche, you will not be entitled to the full 340 euros. The difference with respect to 16,576 euros is 224 euros, and when applying the coefficient of 0.2 the reduction amounts to 44.80 euros. In this way, the final deduction that could be applied in your declaration would be 295.20 euros.
If income rises to 17,800 euros, the excess over the base threshold would be 1,224 euros. In that case, by multiplying that amount by 0.2, the result is a reduction of 244.80 euros, so the deduction would be 95.20 euros. With this system, the tax advantage is concentrated on the lowest salaries and progressively disappears as income increases.
What workers must do to apply it to their income
Taxpayers who meet the requirements can check this deduction from the moment they file their return, since the 2025 Income Tax campaign began on April 8, 2026. The Treasury includes this measure within the deductions of the total net amount of the tax, so its effect is noticeable when reviewing the final result of the return, either by reducing the payment or increasing the refund.
Even so, it is advisable to review the draft in detail before confirming it. Although the Tax Agency works with the tax data provided by companies and other payers, any error in work income or in the rest of the income can alter the calculation of this deduction.