Between the 24th and 25th of each month, pensions are paid in advance by some banks, such as CaixaBank, Santander, Unicaja or Banco Sabadell, so this month, with the revaluation of 8 5% announced by the Government of Spain, there are many pensioners who expected to see a historic rise reflected in their January payroll. So much so, that one of the most demanded questions has been: why haven’t they raised my pension? Well, the truth is that there is an explanation.
The first thing to know is that contributory pensions, that is, those directly managed by Social Security, are subject to the same taxation as the income from the work of an employee for another’s account with regard to taxation in the Treasury. Therefore, IRPF withholdings are applied to them, which is determined by the amount charged. In addition, to all this we must add that personal circumstances of the pensioner may also be affected, such as having a disability, being married or separated. This is established in article 81 of the Personal Income Tax Regulation.
To give an example, in the case of the maximum pension, which in 2023 exceeds 3,058 euros per month or 42,823.34 euros per year for the first time in the history of our country, an IRPF of 18.5% is applied, while that the minimum rates range from 9.5% for pensions of less than 12,450 euros. Therefore, these contributory social pensions will have to be discounted by the contribution percentages that correspond to them.
How much will they take away from personal income tax in the retirement pension in 2023?
Contributory retirement pensions, unlike non-contributory ones, are considered, for tax purposes for the Tax Agency, as work income, so they are exposed to personal income tax withholding. The minimum rates range from 9.5% for amounts less than 12,450 euros per year to 18.50% for those that reach 42,823.34 euros per year.
In order to verify it exactly, a graph is shown below that shows the price brackets in 2023: economic activities, income from the transfer of image rights, capital gains, movable capital and real estate capital.
In the event that you want to test how much the IRPF tranche is in your pension, the Treasury offers a simulator in which you can calculate what percentage of IRPF you have to pay if you are a pensioner.