After the increase in the Minimum Interprofessional Salary (SMI) to 1,221 euros per month, there are many doubts about how the people who receive this salary or their fiscal management will be taxed. Well, although the Government promised that the new SMI would not be taxed, there will be a monthly withholding on the payroll for those who receive this salary. The Ministry of Finance clarifies that, although the SMI does not have to assume the payment of personal income tax, workers who earn the minimum wage will have a withholding on their payroll of an average of 43 euros per month for personal income tax, an amount that can be recovered if the Income Tax Return is submitted.
The Ministry of Finance has chosen the formula of maintaining the current exempt minimum, which is 15,876 euros per year, instead of increasing it to the new SMI. Withholdings have a limit of 43% of the difference between the SMI of 17.94 euros and 15,876 euros per year. As a consequence, if this limit is exceeded, payroll withholdings are generated.
Why are withholdings applied if the Government speaks of “type 0”
As we said, although the Government assured that the minimum wage will in practice remain without effective taxation, the truth is that a withholding will be applied month after month. This withholding, on an annual basis, will be close to 523 euros, which is equivalent to about 43 euros per month, with a limit of 43% on the difference between the annual SMI (17,094 euros) and the threshold that marks the obligation to pay taxes (15,876 euros).
That is, the gross salary increases, but the net salary may be reduced each month if the withholdings are not adjusted correctly or the declaration is not submitted later.
How to recover withheld money
If you want to recover this withheld money, the Treasury makes available to the taxpayer a specific deduction in personal income tax of up to 590.89 euros per year, a figure slightly higher than what would be withheld during the year. This deduction offsets both the state and regional sections of the tax. Of course, in order to access this tax tool, the worker must present the Income Tax Return from the previous year.
This is where the dilemma comes, since many employees who collect the SMI are not required to declare due to their income level. If they do not do so voluntarily, the amounts withheld will not be returned ex officio.
For this reason, experts recommend reviewing the draft even if there is no legal obligation, since the result could be returned.
Progressive reduction up to salaries of 20,000 euros
The measure is not limited exclusively to the SMI. The Treasury has designed the tax benefit progressively so that it also applies to salaries lower than about 20,048 euros per year.
The objective is to avoid the so-called “jump” of the tax, which causes those who earn slightly more than the minimum wage to bear high marginal rates. In this way, incomes of less than 20,000 euros gross will be able to benefit from a tax reduction of up to 591 euros.
As explained by the Ministry of Finance in its appearance, a worker who collects the SMI in 2026 will pay 356 euros less in personal income tax than the previous year.
Evolution of the tax treatment of the SMI
The Government has also shown how the taxation of a salary equivalent to the current SMI (17,094 euros per year) has changed:
- In 2012 it supported an effective rate of 11.9%.
- In 2019 it dropped to 8.1%.
- In 2024 it stood at 3.5% after the exempt minimum was raised.
- In 2026, the Executive defends that the rate will be 0%, although in practice it will only be if the declaration is submitted.
Who is affected by the rise?
According to union data, the increase in the SMI will benefit around 9% of employees, especially women over 35 years of age with a permanent contract in sectors such as commerce or hospitality and residents in communities such as the Canary Islands, Extremadura, Murcia or Andalusia.
Now the key will be in the next Income campaign. Those who earn the minimum wage should check if they have withholdings applied and consider submitting the declaration, even if they are not obliged.
Otherwise, those up to 43 euros per month that the Treasury will retain in your payroll may not return to your pocket.