Feijóo promises to shield IRPF exemption on SMI increases, sparking controversy

The electoral campaign ahead of the general elections on November 29 has intensified with a new clash between the People's Party (PP) and the coalition Government. PP leader Alberto Núñez Feijóo has announced that, if in power, he will legally guarantee the automatic IRPF exemption for any increase in the Interprofessional Minimum Wage (SMI). This promise emerged following an interview on Cadena SER, where the PP leader made claims about the current taxation of the minimum wage that have been questioned by the Ministry of Finance and the Second Vice President, Yolanda Díaz.

Feijóo's claim and the Executive's response

During the conversation with host Aimar Bretos, Feijóo argued that the Government "has made a good deal by raising the minimum wage" and that "the Government has taken the most money from workers." According to his account, by forcing companies to raise wages, workers exceed the IRPF threshold and pay more in social security contributions, while the State keeps part of the increase. Feijóo even claimed that the SMI "is not fully exempt" and that in the past there were parliamentary discussions where the Government wanted to include it in the taxable base.

This stance has been refuted by the Executive. Yolanda Díaz stated on her Bluesky account: "Feijóo is lying or does not know what he is talking about. Those who earn the minimum wage do not pay IRPF." For his part, Finance Minister Arcadi España clarified on X that the Government has guaranteed for four years that the SMI is not taxed, recalling that during the previous PP term, this same wage paid an average of 1,800 euros in IRPF in nominal terms.

Tax mechanics: deductions versus exemption

The technical nuance lies in how the non-taxation is structured. As explained by El País, wages at the SMI level are not technically "exempt" in the taxable base, but in practice they do not contribute to IRPF thanks to a deduction in the following year's income tax return.

• For those earning up to 17,094 euros gross annually (the SMI amount in 2026), 590.89 euros are deducted, which cancels out the tax liability.
• This deduction is progressively reduced for higher salaries, up to 20,048 euros annually.

Although the employer initially withholds taxes, the Ministry of Finance refunds the amount through the tax return. Feijóo later clarified on social media that his proposal is to guarantee that the exemption is permanent and automatic, criticizing the "internal clashes" of the current Executive on this issue, which did indeed occur between the Finance and Labor ministries in previous years.

PP's labor and social commitments

Beyond the tax controversy, Feijóo has detailed other priorities of his program:

1. Social Pact: He has committed to meeting with unions and employers' associations to agree on the SMI, criticizing the current Government for having set it primarily with unions.
2. Pensions: He guarantees the annual update of pensions in line with the CPI and the reactivation of the Toledo Pact to ensure the system's viability.
3. Housing: He proposes building one million homes, mobilizing public land to offer flats 30% cheaper, and approving an Anti-Squatting Law in his first 100 days.

Context of the SMI increase

The Ministry of Labor is preparing a wage floor increase for 2027 of around 5%, a figure expected to be finalized before the elections, a scenario that the CEOE has labeled "incredible." Since 2018, the SMI has increased by 66%, although the most significant increases relative to inflation occurred in the early years of the previous legislature, when the wage was around 736 euros. Feijóo has avoided committing to a specific percentage increase, insisting that his goal is to raise the average wage and not just the minimum, to improve the real purchasing power of workers.