The Foundation for Applied Economics Studies (Fedea) has calculated that the non-adjustment for inflation of the Personal Income Tax (IRPF) for a family of four with a gross income of €50,000 has led to a 30% increase in the tax bill, although the effects are even greater in proportional terms for lower incomes.
In its latest report, Fedea has analyzed the consequences of not updating the tax scale and the minimum tax-exempt amount of the state section of the IRPF for inflation, which have not been touched since 2015.
Since the accumulated inflation since then is almost 27%, the non-update has meant a “very significant increase in the tax through a procedure that is not very transparent for citizens,” the Foundation has warned.
Experts have explained that inflation causes taxpayers’ monetary income to increase, even if their purchasing power does not, pushing them into higher tax brackets where higher rates are paid even though real income remains the same.
