The tax changes shaping 2026

Updated on 27 September 2026. We have reviewed the whole article against the law in force: the income tax changes we presented as new for 2026 have in fact applied since April 2025, the exemption for compensation paid by insurers has more requirements than we stated, and the 2026 limits for the módulos system are now confirmed. We have also added what has really shaped the year: the rolled-over State Budget, the energy-related deductions, the temporary VAT cuts, e-invoicing and the changes in Madrid.

The 2026 tax year has not brought a major tax reform, but it has consolidated a paradigm shift that the Spanish tax authorities (Administración tributaria) have been preparing for some time. Control, the traceability of information and consistency between data now take centre stage. This affects large structures and taxpayers with simple situations alike, and calls for a rethink of how tax obligations are approached.

Now, at the end of September, part of what was announced for this year is in force, part fell with the repealed decree-laws and part has been pushed back to 2027. In this guide we separate what applies today, what expires at the end of the year and what is still pending.

A context of legislative restraint

The lack of a stable parliamentary majority has continued to constrain the production of tax legislation. There is no State Budget (Presupuestos Generales del Estado) for 2026: the 2023 Budget remains rolled over, as Article 134.4 of the Spanish Constitution allows. Changes have come through royal decree-laws (reales decretos-leyes, emergency legislation that Parliament must ratify), and not all of them have survived. Parliament repealed Royal Decree-law 16/2025 in January and Royal Decree-law 2/2026 in February, and with them fell many of the tax measures planned for this year.

To clarify what was still standing, the Agencia Tributaria (Spanish Tax Agency) published a note on 1 April 2026 setting out the criteria of the Dirección General de Tributos (DGT, the Directorate-General for Taxation). The practical lesson is simple: before applying a "new" rule, check that it is still in force and has not lapsed for lack of parliamentary ratification.

Streamlining procedures: the tax effects of out-of-court agreements

Organic Law 1/2025 of 2 January, on measures to make the Public Justice Service more efficient, turned appropriate dispute resolution methods (medios adecuados de solución de controversias, MASC), such as mediation or negotiation between lawyers, into a prerequisite for bringing most civil claims. So that these agreements are not treated worse for tax purposes than a court ruling, the same law amended the Personal Income Tax Act (Ley del IRPF).

These changes have been in force since 3 April 2025, so they are not strictly new in 2026: the Tax Agency lists them among the 2025 changes, and they already applied in the 2025 income tax return, filed between April and June 2026.

Personal income tax (IRPF): what dates from 2025 and what is really new in 2026

Severance pay

Article 7.e) of the IRPF Act exempts severance pay up to the mandatory amount set by the Workers' Statute (Estatuto de los Trabajadores), with a ceiling of €180,000. Since the reform, the law expressly states that severance agreed in conciliation before the administrative service provided for in Article 63 of the Labour Jurisdiction Act (in Madrid, the SMAC: Servicio de Mediación, Arbitraje y Conciliación, the Mediation, Arbitration and Conciliation Service) does not count as an agreement between the parties.

This is not a change of criterion: the Tax Agency itself describes it as a clarification, because administrative conciliation was already accepted before. Nor does it open the door to any kind of mediation or any amount:

• Anything above the mandatory statutory severance is taxed, even if agreed in conciliation.
• The exemption requires a genuine severance of ties with the company. It is presumed not to exist if, within the following three years, you work again for the same company or for a related one (Article 1 of the IRPF Regulation).

For an initial estimate of the statutory amount, you can use our severance pay calculator.

Child maintenance payments

Maintenance payments (anualidades por alimentos) that children receive from their parents are exempt (Article 7.k) when they are set in a separation or divorce agreement (convenio regulador) approved by a judge, formalised before the court clerk (letrado de la Administración de Justicia) or signed as a public deed before a notary, whether or not it comes from a MASC. They are also exempt when set by a court decision. Under the same conditions, the parent who pays them can apply the separate tax scale in Articles 64 and 75, which usually lowers their tax bill, provided they are not entitled to the child allowance (mínimo por descendientes) for those children and the payments are lower than their general taxable base.

Personal injury compensation paid by insurers

Article 7.d) also exempts compensation for physical or psychological harm agreed out of court. For this, it is not enough for the policy to set the amount: all of these requirements must be met:

1. It is paid by the insurer of the person who caused the harm.
2. It derives from an agreement reached through mediation or another MASC provided for by law.
3. A neutral third party took part in the agreement.
4. The agreement was formalised as a public deed (escritura pública).
5. The exempt amount does not exceed what would result from the road traffic accident compensation scale (annex to Royal Legislative Decree 8/2004).

What is really new in the 2026 IRPF

• Deduction for low earners. Law 5/2025 created it for 2025 (€340) and Royal Decree-law 5/2026 raises it for 2026. If your gross income from work as an employee or civil servant does not exceed €17,094 (the 2026 annual minimum wage), you can deduct up to €590.89; between €17,094 and €20,048.45 the deduction tapers off gradually. Pensions and unemployment benefit do not qualify and are added to your other income, which, excluding exempt income, cannot exceed €6,500. It is not a payment: at most it cancels the tax due on those earnings. There is more detail in our article on the 2026 minimum wage.
• People on unemployment benefit. Since Royal Decree-law 3/2026, receiving unemployment benefit no longer requires you, on its own, to file a return. The general rules apply.
• Energy-related deductions. Royal Decree-law 7/2026 extended two deductions until 31 December 2026:
  • the one for energy-efficiency works on your home, with the certificate issued before 1 January 2027 (in residential buildings, works until 31 December 2027);
  • the one for buying electric vehicles and charging points.
• New deduction for renewable self-consumption. The same decree-law created it only for installations paid for and completed in 2026:
  • 10% of the amount invested, or 20% for homes in residential buildings;
  • a maximum base of €5,000 a year;
  • no cash payments, and the electrical installation certificate is required;
  • the installation cannot be used for a business activity.

Corporate Income Tax: the 2026 rates for SMEs

The gradual reduction approved by Law 7/2024 is still under way. These are the rates according to the year in which the tax period begins:

The general rate remains 25%. Newly created entities pay 15% in their first period with a positive taxable base and in the following one. A common mistake: companies that the law treats as asset-holding entities (entidades patrimoniales) are excluded from these reduced rates (Article 29.1 of the Corporate Income Tax Act). If your financial year matches the calendar year, the 2026 rates will apply in the return you file in July 2027.

In addition, Royal Decree-law 7/2026 extends to 2026 free depreciation (libertad de amortización) for renewable self-consumption installations and for new electric or plug-in hybrid vehicles and charging points used in the business (Additional Provisions 17 and 18 of the Corporate Income Tax Act), each with its own requirements.

Self-employed people under módulos: the 2026 limits are now clear

The two decree-laws that extended into 2026 the thresholds for the objective assessment regime (estimación objetiva, commonly known as "módulos"), 16/2025 and 2/2026, were repealed. Even so, according to the Tax Agency's note of 1 April 2026:

• Throughout 2026 the limits of €250,000 of gross income for all activities combined (except farming) and €125,000 for amounts invoiced to businesses and professionals remain in place.
• The limits for the simplified VAT regime and the special regime for agriculture, livestock and fishing also remain.
• Waivers and revocations filed while those decree-laws were in force are valid.

Order HAC/1425/2025 kept the same módulos for 2026 and a general 5% reduction of net income.

The uncertainty now shifts to 2027. The permanent limits in the law are €150,000 and €75,000. If no further extension with the rank of law is approved before the end of the year, those would apply in 2027, and they are measured on what you invoice in 2026. If you are close to those figures, review your numbers before the waiver deadline, which usually falls in December. If you are considering moving to direct assessment, our guide to deductible expenses for the self-employed in 2026 may help.

VAT: temporary cuts on energy

Contrary to expectations, VAT (IVA) did change in 2026, although only temporarily:

• Royal Decree-law 7/2026 cut VAT from 21% to 10%, until 30 June, on electricity (contracts below 10 kW of contracted power and severely vulnerable consumers), natural gas, pellets, briquettes and firewood, and on motor fuels (petrol, diesel and biofuels).
• According to the Tax Agency, electricity, natural gas, pellets, briquettes and firewood went back to 21% on 1 June. Motor fuels went back to 21% on 1 July.
• Besides VAT, the Electricity Tax (Impuesto sobre la Electricidad, cut from 5.11% to 0.5% until 31 May) and the Hydrocarbons Tax (Impuesto sobre Hidrocarburos) were also temporarily reduced. For petrol and diesel, Royal Decree-law 18/2026 kept a tapering cut in July, August and September: 15, 10 and 5 cents per litre, or more if the consumer price index for that fuel rose by more than 15% year on year.
• The same decree-law only allowed a return to 10% VAT in August or September if the consumer price index for electricity or gas exceeded that of the same month of the previous year by more than 15%. There is no record of that cut being reactivated, so electricity and gas are currently taxed at 21%. Its temporary measures were due to run until 30 September 2026 and, based on what had been published in the BOE (Official State Gazette) by the date of this update, there was no extension.

In the medium term, changes will come from the European "VAT in the Digital Age" (ViDA) package, adopted in 2025, which will apply in phases and which Spain has not yet incorporated into its legislation.

Invoicing: Verifactu and e-invoicing, two separate obligations

These are two different obligations that are often confused:

• Verifactu. The Regulation on invoicing software systems (Royal Decree 1007/2023) sets the requirements for the software you use to issue invoices. Following Royal Decree-law 15/2025, companies subject to Corporate Income Tax must have it adapted before 1 January 2027, and the self-employed and other obliged taxpayers before 1 July 2027. It does not affect those who invoice without software, those in the SII (Immediate Supply of Information) system or those whose tax domicile is in the Basque Country or Navarre. We explain it in detail in our article on Verifactu.
• E-invoicing between businesses and professionals. This is implemented by Royal Decree 238/2026, in force since 20 April 2026. It starts to apply 12 months after a ministerial order comes into force if your volume of operations exceeds €8 million, and 24 months after in all other cases. As of 27 September 2026 that order has not been published in the BOE, so the obligation will not arrive until 12 and 24 months after the order comes into force. It does not affect simplified invoices (receipts), except qualified ones, which show the recipient's tax ID (NIF) and address. And a PDF is not an electronic invoice for these purposes.

More data in the tax authorities' hands

Since 1 January 2026 (Royal Decree 253/2025), banks and payment institutions report every month to the Tax Agency who holds each account and the payments received by businesses and professionals by card (point-of-sale terminals) or through payments linked to a mobile number, such as Bizum. This is not a new tax, but what you declare must match what the tax authorities already hold.

Local taxation: municipal capital gains tax and the waste charge

• Municipal capital gains tax (plusvalía municipal). The maximum coefficients for the objective method are set by a rule with the rank of law (Article 107.4 of the Local Finances Act), not by each town council on its own. The updates planned for 2025 and 2026 fell with the decree-laws that contained them, so since 28 January 2026 the maximums applicable since 2024 apply again (transfers in the first days of January, while the update was still in force, deserve a specific check). Your town council applies those in its bylaw, without exceeding them. You can also ask for the tax to be calculated on the actual gain if that is lower and, if you prove that you sold without a gain, no tax is due.
• Waste charge. Law 7/2022 required town councils to have, before 10 April 2025, a specific, separate and self-financing fee or charge (tasa or prestación patrimonial) for waste management. Its amount, rebates and method of calculation depend on each bylaw, so check the one for your municipality.

If you live or have your business in Madrid

• Two new benefits since 1 January 2026. They were added by Law 6/2025 on the General Budget of the Community of Madrid for 2026:
  • in income tax, a deduction of 50% of tuition fees, up to €400, if you are under 30, have been registered with Social Security or a professional mutual fund for at least 300 days of the year because of your work, and are enrolled for the full year of an official university degree or a higher vocational training course (FP de grado superior) (it does not apply if you work under a training contract);
  • a 95% rebate on Property Transfer Tax and Stamp Duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados) when a long-established shop or hospitality business (con solera, at least 50 years of activity in the region) buys a property for its business. In some cases it also applies when the premises are rented, or to someone who acquires the business and keeps it running for five years.
• Family businesses. Law 3/2026 of the Community of Madrid on Support for Family Businesses, in force since 1 July 2026, creates regional reductions of 99% in Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones). They apply to inheriting or receiving as a gift a sole-trader business, a professional practice or shares in the family company. The law extends the benefit to more relatives (for example, siblings, nephews and nieces, or cousins) and requires, among other things, keeping what you receive for five years. It cannot be combined with the equivalent state reduction, and you must opt for it within the deadline for the tax return. We cover this in how a family business is taxed.
• Regional income tax. In January 2026 the regional government announced a half-point cut in its share of IRPF (minimum rate of 8% and maximum of 20%), planned for 2027. As of this update we are not aware of the law approving it having been published, so for now it is only an announcement.

Key dates for the rest of 2026 and for 2027

Tax planning in a year of apparent calm

2026 has been a year without a major reform, but with many detailed changes and deadlines that expire. Before the year ends, it is worth:

• checking that each measure you plan to apply is still in force;
• paying for deductible investments by non-cash means and keeping the receipts;
• making sure your card and Bizum takings match what you declare;
• reviewing your 2026 turnover if you are under módulos;
• asking your software provider whether it will be adapted to Verifactu in time.

In an increasingly automated system, planning ahead remains the best way to avoid errors, penalties and unnecessary disputes with the tax authorities. If you would like to review how these changes affect you, you can book a tax consultation or write to us via our contact page.

Legislation and sources

• Organic Law 1/2025 of 2 January on measures to make the Public Justice Service more efficient (BOE)
• Law 35/2006 on Personal Income Tax, consolidated text (BOE)
• Royal Decree-law 3/2026 of 3 February (end of the filing obligation for unemployment benefit) (BOE)
• Royal Decree-law 5/2026 of 17 February (deduction for employment income) (BOE)
• Law 27/2014 on Corporate Income Tax, consolidated text (BOE)
• Spanish Tax Agency: note on the effects of Royal Decree-laws 16/2025 and 2/2026
• Order HAC/1425/2025 on módulos and the simplified VAT regime for 2026 (BOE)
• Royal Decree-law 7/2026 of 20 March (VAT on energy, deductions and free depreciation) (BOE)
• Royal Decree-law 18/2026 of 29 June (energy tax measures until 30 September) (BOE)
• Royal Decree 1007/2023, Regulation on invoicing software systems (Verifactu), consolidated text (BOE)
• Royal Decree 238/2026 on mandatory e-invoicing between businesses and professionals (BOE)
• Royal Decree 253/2025 of 1 April (monthly reporting of accounts and payments received) (BOE)
• Royal Legislative Decree 2/2004, consolidated text of the Local Finances Act (BOE)
• Law 7/2022 on waste and contaminated soils for a circular economy, consolidated text (BOE)
• Law 6/2025 of 23 December on the General Budget of the Community of Madrid for 2026 (BOE)
• Law 3/2026 of 30 June on Support for Family Businesses, Community of Madrid (BOE)