Extremadura to implement Spain's lowest initial income tax rate

The regional government of Extremadura plans to expand its fiscal advantage by implementing the lowest initial personal income tax (IRPF) rate in Spain. According to Elena Manzano, the Minister of Finance, the 2027 budget is expected to include a reduction of the first two tax brackets by a quarter point, setting them at 7.5% and 9.5% respectively.

This move would place Extremadura's initial rate half a percentage point below La Rioja's planned 8% and Madrid's projected 8%. For a taxpayer under 65 without family burdens or specific deductions, this reduction is estimated to provide an additional annual saving of approximately 37 euros compared to 2026.

Additionally, the regional government intends to lower the reduced rate for the Property Transfer Tax (ITP) for certain groups from 4% to 3.5%. These tax measures are part of a continuity strategy following the government pact with Vox.