Canary Islands IRPF tax revenue rises 68% amid inflation

Tax revenue from Personal Income Tax (IRPF) in the Canary Islands has seen significant growth, rising from 2,003 million euros in 2021 to 3,367 million euros in 2025, a 68% increase over four years. Data through July 2026 indicates a continued upward trend, with 2,440.6 million euros collected compared to 2,160.7 million euros during the same period the previous year, representing a year-on-year increase of nearly 13%.

This surge in revenue occurs despite wages only increasing by 4.5% according to INE data. Experts point to a phenomenon known as “cold progressivity,” where inflation pushes taxpayers—including the self-employed—into higher tax brackets because the state tax scale has not been updated since 2015. While nominal incomes may rise to compensate for inflation, the lack of tax bracket adjustment (deflation) means taxpayers pay a higher proportion of their income to the treasury without an actual increase in purchasing power.