This Wednesday, the Government proposed to unions and employers that the interprofessional minimum wage rise in 2026 (17,094 euros per year). This income is currently set at 1,184 euros per month, so this proposal will mean 37 euros more per month, as confirmed by the Secretary of State for Labor, Joaquín Pérez Rey, with the social partners, who must communicate in the coming days whether or not they support this proposal. In any case, the increase will be approved shortly by the Council of Ministers and will have retroactive effects on all payrolls since last January 1.
In this way, the Executive has opted for the low band of increase in this income proposed by the committee of experts that proposed an increase of 3.1% if the minimum wage remained untaxed in personal income tax, or 4.7%, up to 1,240 euros per month (17,360 euros annually) if its tutors paid for that income. In this way, Pérez Rey has committed to ensuring that “the beneficiaries of this income do not pay taxes.”
However, Labor’s commitment is that the net collection of this income is 17,094 euros per year, for which the Treasury must adopt, where necessary, new deductions that keep the recipients untaxed. “The Labor proposal is agreed upon with the Treasury, it is a Government proposal to exempt the resulting amount from taxation (1,221 euros per month). How to carry out this relief, exemption or appropriate tax figure is something that we leave to the Ministry of Finance, but the most normal thing is that it continues to be proposed in the same terms as in previous years,” said Pérez Rey.
The law does not oblige the Government to negotiate the increase in the minimum wage with employers and unions, it only has to “consult”, listen to them and then make its own decision. Although traditionally the Executive does subject this measure to a negotiating process and tries to seek the greatest possible consensus with the social partners. This year has not been an exception but, from the beginning, the positions have been very conflicting: , while the employers’ associations have only been willing, until now, for the increase to be 1.5%.
Taxation debate
After the controversies experienced in recent years about whether or not the minimum wage should be taxed in personal income tax, as this income increases and approaches or exceeds the figures exempt from taxation, the ministry headed by Vice President Yolanda Díaz commissioned, after the summer, the committee of experts that prepares the proposal to increase the SMI to set two scenarios for 2026. This committee thus prepared an increase if the beneficiaries of the minimum wage continued to pay taxes in practice and another if they began to do it.
The debate on the taxation of the legal minimum wage floor lies in the substantial increase in employees who stop contributing to personal income tax as the minimum wage increases and has done so by 61% since 2018. of the Independent Authority for Fiscal Responsibility (Airef) drew attention to a “concentration of workers around the new threshold [del SMI] and at the levels directly above.” According to this, in 2018 only 3.5% of workers contributed for the minimum base – comparable to those who receive the SMI -, while just five years later, in 2023, this percentage doubled to 7.4%. And those who earn just a little more than the minimum wage are advancing even more strongly: in 2018, 7.9% of workers contributed for 125% of the minimum base and in 2023 they were 22.8%.
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