When filing your personal income tax Spain return, many taxpayers don’t realise they can reduce their tax burden even further by correctly applying both state and regional tax deductions. Knowing the difference between them is not just useful, it’s essential for maximising your savings based on where you live.
What are State Deductions?
State deductions are tax benefits regulated at a national level, so they apply to all taxpayers regardless of their autonomous community. They’re detailed in the IRPF Law and managed by the Tax Agency. Some of the most common ones include:
- Deductions for donations to NGOs.
- The maternity deduction.
- Deductions for investing in newly created companies.
- The transitional regime deduction for home purchases (for properties acquired before 2013).
- Deductions for energy efficiency improvements.
These deductions are applied to the state tax liability on the Renta Web platform and have a general scope. For example, if you donate €200 to an NGO under the special tax regime, you can deduct 80% on your IRPF, no matter if you live in Andalusia or Galicia.
What are Regional Taxes and Deductions?
Regional deductions are tax benefits established by each autonomous community for their residents. You can only apply them if you were a tax resident in that community as of December 31st of the previous year. They typically apply to things like:
- Renting or buying a main home.
- Having or adopting children.
- Educational or university expenses.
- Environmental or rural investments.
- Caring for the elderly, disabled, etc.
For instance, in the Valencian Community, you can deduct up to €100 for each child in the second cycle of early childhood education—a deduction not available in other regions. It’s vital to check your official regional guide on the Tax Agency’s website each year.
How Do State vs. Regional Taxes Interact?
Both types of deductions are applied separately on your personal income tax Spain return. State deductions reduce your state tax liability, while regional deductions reduce your specific regional tax liability. You cannot deduct the same expense twice. For example, if an expense has already been deducted at the state level, you can’t use it again at the regional level.
Strategy: How to Maximise Your Savings
To get the most out of both types of deductions:
- Review all deductions, both state and regional, available in your community.
- Avoid duplicating expenses.
- Verify additional limits based on age, income, family, or personal situation.
- Keep all supporting documents—invoices, certificates, or contracts.
- When using the Renta Web platform, make sure you select your correct community and manually add any regional deductions that aren’t automatically included in your draft.
Understanding the difference between state vs. regional taxes is crucial for optimising your tax return. Don’t just accept the draft; you need to know which incentives you can claim in your community and combine them with those from the state without duplicating expenses. A little planning can make all the difference between paying more and getting a refund.
If you need personalized assistance, at Entre Trámites we offer management and tax advisory services for freelancers and SMEs. You can contact us through this contact form for us to call you, or if you prefer, you can schedule a free consultation or write to us on WhatsApp.
