The clash over the minimum wage

Labour Minister Yolanda Díaz accused Alberto Núñez Feijóo, the Popular Party (PP) leader, of lying about how the minimum wage is taxed. Speaking to reporters on Friday, 23 October, during a visit to the TándEM employment training programme, she said salaried income below 21,000 euros does not pay income tax (IRPF), pensions included. She urged pensioners, workers, women and young people to take note of the PP's economic plans.

“First, he lies and does not know what he is talking about. And second, he will not commit to the policies the Labour Ministry and the Spanish government are pursuing.”

Earlier that day, Feijóo told the Cadena SER radio network that the government had profited from minimum wage increases, because higher pay can push workers into a higher IRPF bracket and the state keeps roughly 30% of each rise through taxes or social security contributions. When presenter Aimar Bretos noted that the minimum wage is not subject to IRPF, Feijóo replied that it had been exempt before and blamed the government for wanting it included. The PSOE responded on X that Feijóo did not know, or did not want to know, that the minimum wage carries no IRPF withholding.

How the minimum wage is taxed

El País and eldiario.es both explained that the 2026 minimum wage of 17,094 euros gross a year is not formally exempt but in practice goes untaxed. Employers withhold IRPF in the first place, and the tax authority then returns the amount through a deduction of 590.89 euros on the annual return for earners up to that level. The deduction gradually shrinks for salaries up to 20,048 euros a year. Eldiario.es listed Feijóo's remarks among the falsehoods in its review of the interview, while confirming that the Finance and Labour ministries had clashed over the issue and settled it with a deduction designed so the minimum wage pays no IRPF on the 2026 return. Finance Minister Arcadi España wrote on X that the government had cut IRPF for lower earners over four years, and that under the PP a minimum-wage worker paid on average 1,800 euros in nominal IRPF, or more than 700 euros at constant prices.

Feijóo's 2027 tax pledge

At a campaign rally in Valencia on the same day, Feijóo addressed workers directly and promised a tax cut in 2027 that would start with them.

“We are going to lower taxes and we will start with workers.”

He said that whoever earns the least will not pay taxes and that the income threshold for filing a return would rise by law each time the minimum wage goes up. On X he wrote that any minimum wage increase would be exempt from IRPF by law and automatically. He also criticised the government's internal row over the issue, saying he would not repeat the episode in which the government wanted to hand the Finance Ministry part of each rise until he stopped it.

Pending labour reforms and the election

Díaz said the government had not given up on working-time recording and on a reform of wage supplements that would stop them absorbing minimum wage rises, adding that the regulations are still moving through the required steps even though elections have now been called. She cited two and a half million unpaid overtime hours a week in Spain and attacked PP economy vice-secretary Alberto Nadal, who said Spain's overtime cap is lower than in France or Italy. Unions CCOO and UGT are asking for at least a 7% rise for 2027, while the employers' group CEOE argues that an update is not yet due because the last one was closed in February. The general election is set for 29 November.