Some Basics On Income Tax With Perks For 65+
Today we will break down the Personal Income Tax (IRPF) for residents in Spain. We will present a brief summary of the IRPF and the existing tax benefits for individuals over 65 years old and/or with disabilities.
Tax Residence
Let’s start with preliminary considerations. Who is considered a tax resident in Spain? A taxpayer is considered a tax resident if they meet any of the following criteria:
- They stay in Spanish territory for more than 183 days a year.
- Their main center of economic interests is in Spain.
It is presumed that a person is a resident if their legally unseparated spouse and dependent minor children reside in Spain.
What does this mean?
It means you are taxed on your worldwide income, but international agreements prevent double taxation. You can check out our video on these conventions.
Basic Tax Declaration
We will follow this basic declaration, focusing on what is interesting for people over 65 or with disabilities.
Exempt Income
Here it becomes interesting. For people over 65, some types of income are exempt from taxation, such as:
- Social Security benefits for absolute permanent disability or severe disability.
- Subsidies for stays in care homes, provided certain conditions are met:
- Being over 65 years old.
- Income below twice the IPREM (Indicador Público de Renta de Efectos Múltiples).
- Benefits from the System for Autonomy and Dependency Care, such as caregiver allowances for elderly individuals.
Key Tax Benefits Related to Main Residence
- Reverse mortgage: Did you know that amounts received from a reverse mortgage are not considered income if you are over 65 years old or in a dependency situation?
- Sale of property: Additionally, if you sell your main residence after turning 65, the capital gain is exempt if the proceeds are reinvested in a life annuity.
Deductions in the Taxable Base
Deductions are calculated from this point. For people over 65 these are the ones that you have to consider:
| Category | Condition | Amount (Annual) |
|---|---|---|
| Disability Minimums | Disability degree ≥ 33% | €3,000 |
| for the taxpayer, ascendants, or descendants | Disability degree ≥ 65% | €9,000 |
| Assistance expenses (third-party help required) | €3,000 | |
| Minimums for Ascendants | Disabled ascendants (any age) | €1,150 |
| ascendants over 65 years or with disabilities living with the taxpayer | Ascendants ≥ 65 years | €1,150 |
| Ascendants ≥ 75 years | €2,550 (€1,150 + €1,400) | |
| Personal Minimum | General amount | €5,550 |
| Over 65 years | €6,700 (€5,550 + €1,150) | |
| Over 75 years | €8,100 (€5,550 + €1,150 + €1,400) |
Why is it called minimum?
Because it is the minimum amount you are entitled to, but regional governments (Autonomous Communities) can increase it. Many do, averaging an increase of €200.
General Tax Scale
After deducting all these amounts from the taxable base, the result is the taxable liquid base. This is the amount on which the tax rate is applied.
The gross tax amount is calculated using a progressive state and regional scale, ranging from 9.5% to 49% for income over €300,000.
State & Autonomous Community Quota
Both the state and regional quotas should follow a tiered approach where:
- A fixed amount applies for income within each bracket’s base limit.
- For income exceeding the base limit of a bracket but not reaching the next one, a percentage rate applies only to that portion.
This next table shows the state quota for 2024. Similarly, each Autonomous Community adds its tax brackets. To make it simple, it would be like the state charges 50% and the Autonomous Communties charge another 50%, but there are some little differences among Autonomous Communities in deductions and tax rates.
| Taxable amount | Fix quota | Remaining taxable amount till next | Percentage |
Some Autonomous Comunities Quotas: You can find them at Tax Agency website.
Andalusia
Catalonia
Madrid
Income Tax Simulator (2024)
With the basic next simulator, you may have a close approach to how much you will be charge on income tax. We have included Andalusia, Catalonia and Madrid.
Income Tax Declaration Simulator