Don't Miss Out on Your Savings! Key Deductions to Optimize Your Income Tax Before December 31st

The Income Tax Campaign might seem far off, but the end of the year is the key moment to make decisions that can significantly lighten your tax bill. Did you know you still have time to act to reduce what you'll pay to the Tax Agency? You have until December 31st to verify and make contributions or movements that will allow you to apply important deductions in your next declaration.

In Spain, the income tax declaration is full of opportunities to optimize your taxes, but many of them require action before the calendar year ends. If you don't act now, you could lose valuable tax benefits.

Essential Deductions to Review Before December 31st:

1. Pension Plans and Social Welfare:
• Contributions: This is one of the most well-known and powerful deductions. Contributions made to pension plans (individual or employment) and other social welfare products (such as Assured Pension Plans – PPAs) directly reduce your taxable base. This means you pay less tax on a portion of your income.
• Limit: Currently, the general contribution limit eligible for deduction is 1,500 euros annually, with possible increases if your spouse or certain disabled family members also make contributions or if it involves employment plans.
• The Key!: If you haven't reached the limit yet or haven't contributed anything, now is the time to consider an additional deposit. You not only save on taxes but also build your future.
2. Deduction for Investment in Main Home (Only for Purchases Before 2013):
• If you acquired your main home or carried out rehabilitation works before January 1, 2013, you can still deduct a percentage of the amounts allocated to mortgage amortization.
• Action: Check if you can make an extraordinary contribution to your mortgage before the end of the year to maximize this deduction if you are below the maximum deductible limit.
3. Autonomous Community Deductions (Don't Forget Them!):
• Each Autonomous Community has its own catalog of tax deductions that can be very varied: for housing rental, birth or adoption, educational expenses, investment in new companies, large families, etc.
• Action: It is essential to review the specific deductions for your community. Some may require having made certain expenses or investments before December 31st.
4. Donations and Contributions to NGOs:
• Donations to foundations and associations declared of public utility, as well as to NGOs, are eligible for deduction in the Personal Income Tax (IRPF).
• Action: If you were planning to make a donation, do it before the end of the year to be able to apply the deduction.

Why Is It So Important to Act Now?

December 31st is the deadline. Contributions or expenses you make after this date will no longer be valid for the current year's income tax declaration. Planning ahead allows you to:

• Anticipate Savings: Reduce the amount payable or increase the refund in your next income tax return.
• Make Informed Decisions: Calmly evaluate which deductions are most suitable for you based on your personal and financial situation.
• Seize Opportunities: Ensure you don't leave money on the table due to lack of knowledge or inaction.

Need Help Navigating the Tax Labyrinth?

The world of deductions can be complex, and each case is unique. At VVP Abogados y Economistas Asociados, we are tax experts and can help you:

• Analyze your personal situation and recommend the deductions you can apply.
• Calculate the tax impact of your contributions before December 31st.
• Ensure you comply with all regulations and optimize your savings.

Don't wait until the last minute! Contact us before December 31st and ensure your 2025 Income Tax return is as favorable as possible.

By C.Fabri