In 2025, the Spanish State collected €142.4 billio through Personal Income Tax (IRPF), a 10% increase compared to the previous year. This was largely due to the Government’s refusal to index tax brackets (deflate the rates) to mitigate the increase in tax pressure caused by inflation. This is known as “fiscal drag” (or “cold progression”): salaries rise in line with inflation, but because tax brackets remain unchanged, more is collected and more is paid—taxpayers move into higher brackets—even though no one’s standard of living actually improves.
In addition to the 10% increase in IRPF revenue, there was an 8% rise in Corporate Tax collection (€42.2 billion) and an increase in VAT revenue—driven by inflation and growth both hovering around 3%—reaching nearly €100 billion. Consequently, total tax revenue has grown by more than 10%, and Spain has achieved a primary fiscal surplus for the first time since 2007.
Over the last four years, tax revenue has risen by 41% (exceeding 24.5% of GDP); nevertheless, Spain continues to close its accounts with a deficit. In 2025, this amounted to -€36.7 billion, the equivalent of 2.2% of GDP.
