Saturday, March 4, 2023, 11:43 p.m.
Contributory pensions have increased in value this year by 8.5%. Good news for pensioners, although it is not so good in certain cases. For some recipients, this increase will mean climbing a section in the Personal Income Tax (IRPF), so they will see an increase in the withholding that is applied to them for this tax.
Pensions -like salaries- are considered as income from work, so each month they have to leave a part at the Treasury window. That percentage will depend on the pensioner’s income and his personal circumstances: whether or not he is married or if he has some type of disability, for example.
The increase in contributory pensions approved for this year in the General State Budget (PGE) is equal to the average of the CPI registered between the months of December 2021 and November 2022. That is, 8.5%. This revaluation will cost the State a little over 13,000 million euros, a figure that represents approximately 3.5 points of the Gross Domestic Product (GDP). Part of that money will return to the public coffers via personal income tax. It is not easy to specify a figure, but some calculations speak of 2,000 million euros. It is the amount of more that compared to last year will be withheld from their payrolls to certain pensioners who skip the bracket in the IRPF.
Not too many pensioners will be affected by this circumstance: especially those located in the border areas of the sections that jump to another after the rise in their pension. Even some -very few, yes- will see how this revaluation is neutralized by the higher income tax. Cases like this will occur among the recipients of the maximum pension, which this 2023 remains at 3,059 euros.
Deflation in the Basque Country
In addition, Basque pensioners have the advantage of the deflation of the income brackets approved by the provincial councils. A measure that seeks to adjust the payment of the tax to the current economic situation, preventing salary increases as a result of inflation from resulting in an increase in the tax bill. For this year, a deflation of personal income tax rates and deductions has been approved by an additional 2% to the 5.5% implemented in 2022.