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Economy

Key tax reforms for Valencia region residents in 2025

13:30

By: Dakir Madiha

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Residents of Valencia, Alicante, and the rest of La Comunitat Valenciana will see significant tax reforms in 2025, impacting wealth tax, inheritance and gift tax, property transfer tax, and personal income tax. These changes, introduced by the right-wing coalition of PP and Vox, aim to bring financial relief to both locals and foreign residents.

The amendments, passed in May 2025, will come into effect once they are published in the Diari Oficial de la Generalitat Valenciana (DOGV). They will apply to the 2025 tax return, filed in spring 2026 alongside the annual income tax declaration (declaración de Renta).

Wealth tax

Starting in 2025, approximately 10,000 Valencian taxpayers will no longer need to pay wealth tax due to a raised exempt minimum from €500,000 to €1 million. For taxpayers exceeding this new threshold—excluding their primary residence—the tax base will be reduced by €500,000, resulting in lower contributions.

In 2022, 26,905 people in the region paid wealth tax, totaling €186 million. Of these, nearly 10,000 individuals with assets between €500,000 and €1 million will now be exempt under the new rules.

Inheritance and gift tax

The inheritance and gift tax for kinship group III (which includes second and third-degree relatives like cousins, nieces, nephews, great-grandparents, and siblings) will see progressive reductions:

25 percent for taxable gifts or inheritance starting June 1, 2026.

50 percent for those given on or after June 1, 2027.

Property transfer tax and stamp duty

From June 1, 2026, the general property transfer tax rate on real estate purchases will drop from 10 percent to 9 percent. Additionally, a new 4 percent rate will apply to rural plots deemed agricultural land by registered professional farmers.

Stamp duty (AJD) will also decrease from 1.5 percent to 1.4 percent. A 50 percent discount on AJD will apply to public deeds related to regional investment projects involving real estate transactions.

Personal income tax

Personal income tax incentives are being expanded to support birth, adoption, and foster care. Other improvements include enhanced deductions for healthcare expenses such as prescription glasses and donations for ecological causes, Valencian cultural heritage, or the promotion of the Valencian language. Donations will benefit from a 20 percent deduction for the first €250 and 25 percent for amounts exceeding this.