If you live in the Community of Madrid you will enjoy the following tax benefits
Income tax reduction
Madrid was the first Community to approve a reduction in personal income tax that benefits the lowest incomes.
Since 2018, the rate applicable to first stretch of the regional scale (payable bases up to 12.450 euros), it has been placed in the 9 percent (compared to 9,5 percent established in the State scale)
In 2022 he entered in force a new reduction of 0,5 percentage points in all sections of the regional scale.
With this reform, the minimum rate is set at 8,5 percent for payable bases up to 12.450 euros.
In the second tranche, up to 17.707,20 euros, the rate stands at 10,70 percent (compared to 12 percent set by the State).
The reduction benefits all taxpayers of the tax that obtain income from work, but mainly to the lowest income, since almost half of Madrid taxpayers have earned income of less than 17.707,20 euros and almost a third of the total are less than 12.450 euros.
As a result of the rise in prices, the rate has been deflated in all its sections by 4,1 percent, which is equivalent to the percentage equivalent to the average salary increase for the second quarter of 100 of the National Institute of Statistics.
In this way, it is achieved that the rise in prices and wages does not lead to an increase in the amount supported by personal income tax.
The deflation affects all sections, in such a way that the rate applicable already in 2022 is the following:
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The deductions that we now detail you can apply in the 2023 INCOME, which will be carried out between the months of April and June 2024.
La 3 / 2023 Act of March 16 amends the Consolidated Text of Legal Provisions of the Community of Madrid in matters of transferred taxes, and establishes a series of measures in the IRPF for the promotion of the birth rate, reconciliation and emancipation, with effect from January 1, 2023.
NEW DEDUCTION FOR HOME PURCHASE DUE TO BIRTH OR ADOPTION
One of the main novelties of the Law is the inclusion of a deduction for those taxpayers who on the occasion of a birth or adoption acquire a habitual residence within three years after the birth or adoption.
The deduction will be 10% of the purchase price of the house, up to maximum of 1.500 euros per year, which will be prorated by tenths in the year of acquisition and in the following nine fiscal years, as long as the home is not transferred beforehand, a circumstance that would mean the loss of the right to deduction.
NEW DEDUCTION FOR OBTAINING LARGE FAMILY STATUS
Another of the most noteworthy innovations is the deduction of 50% in the full regional quota up to a limit of 6.000 euros in individual taxation or 12.000 euros in joint taxation for those taxpayers who obtain recognition as holders of a large family of general category, or in the case of large families de special category of the 100% of the full regional fee up to 12.000 euros in individual taxation or 24.000 jointly.
The deduction will be applicable in the period in which the recognition takes effect. and in the next two exercises. The limit to be entitled to the deduction will be the result of multiplying the number of members of the family unit for 30.000 euros.
NEW DEDUCTION FOR INTEREST DERIVED FROM MORTGAGE LOANS
A new deduction is established in favor of under 30 years, which will allow deducing the 25% of the interest paid in the loans obtained for the acquisition of habitual residence, with a limit of 1.000 euros per year.
DEDUCTION FOR BIRTH OR ADOPTION
The deduction is improved, which becomes 700 euros per born or adopted child in the period and in the following two, instead of the 600 euros previously provided.
The price is also improved up to 700 euros. increase applicable to the exercise of birth or adoption in the case of multiple births or adoptions.
This improvement will only have effects with respect to the children born or adopted on or after January 1, 2023.
DEDUCTION FOR INTERNATIONAL ADOPTION
As in the previous case, it is improved up to the 700 euros the deduction for international adoption for each adopted child in the tax period.
As a novelty, the norm establishes that when the adoptee lives with both adoptive parents, the amount of the deduction will increase by 50%.
HOME RENTAL DEDUCTION
The deduction limit for the rental of homes for persons under 35 years of age is improved, which goes from a limit of 1.000 euros to 1.200 euros per year.
DEDUCTION FOR CARE OF CHILDREN UNDER THREE YEARS OLD
The percentages and limits on the deduction for the Satisfied Social Security contributions by hired domestic workers, which until now was 20% up to 400 euros, and in the case of large families 30% up to 500 euros, and that with the approval of the Law it will be 25% up to 450 euros, and 40% up to 600 euros in the case of large families.
The rule also contains an equalization of minors linked by guardianship or foster care to children or descendants, an equalization that applies not only to personal income tax, but also to Patrimony, ITPAJD and Inheritances and Donations.
La Law 10/2023, of April 12 amends the Madrid Assigned Tax Law to incorporate additional measures to those adopted by the 3 / 2023 Act of March 16.
DEDUCTION FOR PARENT CARE
A new deduction is created $500 for those taxpayers who are entitled to apply the minimum by ascendants of personal income tax.
DEDUCTION FOR EXPENSES DERIVED FROM HOUSING RENTAL
Another of the new deductions is the one established in favor of taxpayers who have leased properties, who may deduct the 10% of expenses conservation or repair of the property, formalization of lease contracts, insurance premiums for damages and non-payments, energy efficiency certificates, all with a limit of 150 euros per year.
DEDUCTION FOR EDUCATIONAL EXPENSES
The concepts of expenses are unified schooling and language teaching on which a deduction may be applied 15% . Until now, only 15% was applied to school expenses. The 5% deduction for the acquisition of clothing for exclusive school use is maintained.
DEDUCTION FOR CARE OF CHILDREN UNDER THREE YEARS OF AGE, ELDERLY DEPENDENTS AND PEOPLE WITH DISABILITIES
The objective scope and the amounts of this deduction, previously limited to the care of children under three years of age, are extended.
The deduction is generally increased up to the 25% with the limit of 450 euros on the annual contributions to Social Security for hiring people under the special regime of Household Employees, while in the case of large families, the deduction increases to 40% with a limit of 600 euros.
To apply the deduction it will be necessary that the taxpayer performs an activity on their own account or on behalf of others, or failing that, receives a contributory pension and have at least one child under three years, or lives at least 183 days with ascending, descending or collateral up to the second degree over 65 years of age and who has a recognized degree of dependency, or who has a disability equal to or greater than 33%. It will also be applicable if the taxpayer himself has a recognized degree of dependency or disability equal to or greater than 33%.
DEDUCTION FOR THE PAYMENT OF INTEREST ON LOANS FOR UNDERGRADUATE, MASTER AND DOCTORATE STUDIES
Another novelty is the one established in favor of those taxpayers who have applied for a loan to study university, whether they were their own, their spouse or descendants who generate the minimum for descendants or who are paid annuities for food. A deduction equivalent to all the interest paid on your financing will be applied.
DEDUCTION FOR INVESTMENT IN THE ACQUISITION OF SHARES AND PARTICIPATIONS OF NEW OR RECENTLY CREATED ENTITIES
The amount of the deduction is improved, which becomes the 40% up to 9.000 euros. Previously it was limited to 30% with a limit of 6.000 euros.
Our public aid received by taxpayersIn general, they are taxed in the General Tax Base as "Other capital gains and losses that do not derive from the transfer of capital elements".
If you have doubts about the nature and taxation of such aid, you should contact the granting body.
Due to its importance, we inform you that Family benefits and aid received from any of the Public Administrations are exempt, whether related to birth, adoption, foster care or care of minor children. This is established in letter z) of article 7 of Law 35/2006 (IRPF Law).
For more information, you can access the following link of the AEAT portal: