Madrid will not reduce personal income tax in 2025. The government of Isabel Díaz Ayuso has chosen not to include in next year’s budget a deflation in the autonomous income section because “the inflation is not out of control. This was announced by the Minister of Economy, Finance and Employment, Rocío Albert, during the press conference following the Governing Council which gave the green light to the bill. budget of the Community of Madrid for 2025.
However, Albert stressed that they are still waiting to know the accumulated CPI data in case further action needs to be taken. “We almost made the decision not to deflate for several reasons: in September 2024, inflation is 1.4%, and we have always committed to doing so so that there is no cold progressivity in personal income tax,” he noted.
The advisor highlighted that the Executive of the Community of Madrid had announced that It would be deflated whenever prices were out of control or above 2%.. “Fortunately, with the data we have today, we can see that inflation remains moderate and that the ECB can therefore continue to lower interest rates, which makes life easier for citizens,” he said. he indicated.
The head of the Madrid Economy explained, after being asked whether Ayuso would not break his electoral promise, that inflation in the month of July was indeed above 2%, but that it ” declined substantially” and that it will end the year, as might be expected, above 2% but “not much above”.
“Fortunately, we are not currently facing galloping inflation.. Last year we had double-digit growth, which does not happen in this situation and the data tells us that we are going to get closer and closer to 2%,” he concluded.
The Community of Madrid has applied personal income tax deflation for two consecutive years, becoming the only region to implement this measure. The first time was in 2022, where the reduction was 4.1% applicable both regionally and on the personal and family minimum. The second took place in 2023, when the reduction in personal income tax was 3.1%. During these two years, Madrid taxpayers saved more than 350 million euros.
