Every month you see an amount withheld in your payroll for IRPF, but do you know exactly how it is calculated? Many workers do not understand why their withholding is higher or lower than a coworker with the same salary. The reason lies in the multiple factors involved in the calculation.
What is IRPF withholding?
IRPF (Personal Income Tax) is a progressive tax: the more you earn, the higher the percentage you pay. But you do not pay it all at once when filing your income tax return. Throughout the year, your employer pays Hacienda a portion of your salary each month. That is the withholding.
Withholding is an advance payment of your annual IRPF. When you file your tax return (between April and June of the following year), the withholdings already paid are compared with the actual tax you owe:
- If they withheld too much → Hacienda refunds the difference
- If they withheld too little → you must pay the difference
The theoretical goal is that withholding equals the exact amount you should pay, so the declaration comes out at 0.
How is withholding calculated?
The calculation is complex and is performed by the employer (or its tax advisor) based on the data you provide through form 145. The simplified process follows these steps:
- Withholding base: estimated annual gross salary
- Minus Social Security: the worker contributes 6.35% of gross salary
- Minus personal and family allowance: a fixed amount that reduces the base (varies depending on children, disability, etc.)
- IRPF brackets: the progressive rate is applied (state + regional)
- Result: annual tax ÷ 12 = monthly withholding
IRPF brackets in Spain
IRPF is a bracketed progressive tax. You do not pay the same percentage on all income; each portion of income is taxed at its own rate:
| Taxable base | State rate |
|---|---|
| Up to €12,450 | 9.5% |
| From €12,450 to €20,200 | 12% |
| From €20,200 to €35,200 | 15% |
| From €35,200 to €60,000 | 18.5% |
| From €60,000 to €300,000 | 22.5% |
| Over €300,000 | 24.5% |
On top of this, the regional rate varies depending on where you live. That is why two people with the same salary can have different withholdings according to their autonomous community.
The effective rate (what you actually pay on your total salary) is always lower than the marginal rate (the rate of the highest bracket you reach), because previous brackets are taxed at lower rates.
Why does my coworker pay less than I do with the same salary?
Because withholding depends on personal factors in addition to salary:
Family situation:
- Having children under 25 reduces the taxable base
- Filing jointly with your spouse can lower the rate
- Having dependent parents over 65 also reduces the base
Disability:
- Degrees between 33% and 65% apply specific reductions
- Degrees above 65% benefit from larger reductions
Autonomous community:
- Madrid and the foral communities (Basque Country, Navarra) usually have lower regional rates
Contract type:
- Artists and professional athletes have specific withholding rates
Can I request that more or less be withheld?
Yes. You can inform your employer, using form 145, of changes in your personal situation that affect the withholding percentage. For example:
- If you have a child → withholding will decrease
- If you take out a mortgage (if your region allows a deduction) → withholding may decrease
- If you have two jobs → the second payer must withhold at least 15%
If you expect your tax return to show a payment due, you can also voluntarily request a higher withholding percentage to avoid a surprise in June.
Social Security: the other payroll deduction
In addition to IRPF, your payroll includes the employee Social Security contribution, currently 6.35% of the contribution base:
- Common contingencies: 4.70%
- Unemployment: 1.55%
- Professional training: 0.10%
- MEI (Intergenerational Equity Mechanism): 0.58% (gradually increasing until 2050)
This deduction is independent of IRPF and does not vary according to your personal situation.
Calculate your exact withholding
The best way to understand how much is withheld and why is to use a calculator. Our IRPF calculator lets you enter your salary, autonomous community, family situation and number of children to obtain a detailed estimate of your monthly withholding, effective rate and net salary.