The government of Madrid has announced a series of new tax measures that will come into effect starting in 2025. These reforms aim to reduce the financial burden on citizens and strengthen Madrid as an economically favorable region. The most significant changes effect the inheritance and gift tax, income tax deductions, and tax benefits for families and companies.
Expansion of tax reductions on inheritance and gift tax
One of the key points of the tax reform is the increase in the reduction of the inheritance and gift tax. Previously, a 25% reduction was applied, but this will now increase to 50%. This means that citizens of the Community of Madrid will only pay half of the taxes they previously owed on inheritances and gifts.
Additionally, a total tax exemption is introduced for gifts under 1,000 euros. For gifts exceeding this amount, the 99% reduction will remain, provided the beneficiaries are direct descendants, spouses, or parents. These measures aim to facilitate the transfer of wealth within families and reduce the tax burden on citizens.
Income tax deductions
Another important aspect of the reform concerns regional deductions in income tax (IRPF). The government of Madrid plans to further reduce the general income tax rate to relieve both employees and the self-employed. Although the exact percentages have not yet been defined, the government has indicated that middle- and low-income earners will be the primary beneficiaries of these adjustments.
Families with children or dependent relatives will also benefit from new tax reductions. The tax exemption threshold for children will be increased, and new deductions will be introduced for the care of elderly or disabled family members.
Tax relief for businesses
Businesses will also benefit from the reform. The government has announced that it will expand certain tax incentives for small and medium-sized enterprises (SMEs) and start-ups. This will include a reduction in the Economic Activities Tax (IAE) for companies with a turnover below a certain threshold. New tax incentives for investments in technology and innovation are also being considered.
Special attention is being given to promoting business creation. Through tax benefits for investors and entrepreneurs, the government aims to facilitate the establishment of new companies, which will further boost Madrid’s economic dynamism.
Conclusion and outlook
With these tax changes, the government of Madrid continues its strategy of low taxes and favorable economic policies. The goal is to reduce the tax burden on citizens and companies and to consolidate Madrid as an attractive destination for investment and entrepreneurship. The tax reform is expected to be gradually implemented throughout 2025.