Residents on the Costa Blanca could pay slightly less income tax next year after the Valencian government announced plans to lower IRPF (Personal Income Tax) rates.
The measure forms part of the proposed Ley de Acompañamiento (Accompanying Measures Law), which the government will approve alongside the 2026 regional budget.
If lawmakers approve the proposal, the tax cut will apply retrospectively from 1 January 2026. Taxpayers would then see the change when they submit their income tax returns in 2027.
Tax cuts would affect most income brackets
The proposed reduction would apply to the first eight regional income tax bands, covering taxable income of up to €100,000.
Higher earners would also benefit because the lower rates would apply to the first portions of their income.
Based on figures released, a taxpayer with taxable income of €18,000 would save around €42 per year on the regional portion of their income tax bill.
That equates to a reduction of approximately 2.3%.
Most taxpayers would see savings of between 2.3% and 2.7%, although the percentage benefit would gradually fall as income increases.
Changes to tax rates
Under the proposal, the lowest regional income tax rate would fall from 9% to 8.8%.
The regional government would keep the highest rate, which applies to taxable income above €200,000, at 29.5%.
Even after the reductions, the Valencian Community would still have Spain’s highest regional income tax rate.
Part of budget agreement with Vox
The tax reduction formed part of negotiations between the regional government and Vox over support for the 2026 budget.
The Consell presented and approved its budget proposal last week, including the tax measures agreed during the talks.
José Antonio Rovira, Regional Minister for Economy, Finance and Public Administration, confirmed during the budget presentation that the government would publish details of the IRPF reduction separately.
What it means for residents
Although individual taxpayers would save relatively modest amounts, the measure represents another attempt by the Valencian government to ease the tax burden on households.
Workers, pensioners and self-employed residents across the Costa Blanca could receive a small financial boost when they settle their 2026 tax affairs.
Officials expect to clarify the final details once lawmakers complete the approval process for the regional budget and accompanying legislation later this year.
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