Margen
Someone offers you a thousand euros more a year, from 20,000 to 21,000 gross, and a person you trust tells you to think it over, that you are about to change tax band and you will end up earning less. Take it. That sentence is false and a calculator settles it in two lines.
The Spanish income tax scale — the IRPF, the tax on what you earn — is progressive by bands, and that word, bands, is the one people get wrong. When you cross a threshold, the new rate applies only to the euros above that threshold. The ones below stay exactly where they were, paying what they were paying.
On the combined scale you see in your tax return — half of it set by the State and half by your region, so the percentages wobble a few tenths depending on where you live — the steps run roughly like this: up to 12,450 euros, 19 %; from 12,450 to 20,200, 24 %; from 20,200 to 35,200, 30 %; from 35,200 to 60,000, 37 %; from 60,000 to 300,000, 45 %; above that, 47 %.
Now the sum on your thousand euros. And first, the detail that puts the example in order: the scale does not look at your gross pay, it looks at your taxable base, which is what is left after social security, deductible expenses and the personal allowances. Say yours is 20,000 euros. The 24 % band runs up to 20,200, so the first 200 euros of the rise are still inside it: 200 × 24 % = 48 euros. The remaining 800 do step into the 30 % band: 800 × 30 % = 240 euros. Add 48 and 240 and you get 288 euros of tax on the rise. You keep 712. Take off the social security contribution as well, 6.35 % that is also proportional, and about 650 reach your account. Less than a thousand, yes. Never less than before.
Try any figure you like and hunt for the number that leaves you worse off than you were. It does not exist. For moving up a band to lose you money, the new rate would have to apply backwards, and there is nothing in the law that does that. Crossing a step costs you, at most, keeping a little less of the top slice.
So where does the myth come from? From two places, and only one of them takes money off you.
The first is your payslip. Withholding is not the tax: it is your own money, which the company deducts and pays over to the tax office on account of the whole year. If they raise your salary in June, the company redoes its forecast and raises the percentage, and since the months already gone were withheld at a lower rate, the whole adjustment piles into the ones that remain. You open the July payslip, see a net figure much like May's, and draw the wrong conclusion. You do take home less that month, yes, but you are not paying too much: the company is simply catching up on what you already owed for the year.
The other one really does cost money, and it is not in the income tax scale. It is in benefits with a threshold. Your daughter's grant, the rent allowance, the school canteen rate, the regional deduction you claim every year: there are no gentle steps there, there is a cliff. Say a grant's limit sits at 21,000 euros of household income and you land on 21,100. In many of them you do not lose a proportional share: you lose the whole amount, or you drop to a different bracket and collect a good deal less. That is where earning 100 euros more can cost you a thousand-odd.
Look at the difference on the calculator again. The taxman takes 288 euros out of your thousand. The grant takes the whole amount. So when someone warns you not to accept a rise, ask them which exact number your benefit hangs from, because each one uses its own definition of income and none of them warns you in advance: some look at the general taxable base, others add the savings base, and others count the whole family.
Tomorrow, if you have a rise on the table, do two separate things. One: ask whoever runs the payroll for the annual withholding forecast with the new salary, so you know what is being paid over on your behalf and can stop reading a single month's net figure. And two: make a list of the grants, allowances, deductions and income-based rates you receive today, look up the exact threshold and the definition of income each one uses, and check whether the new thousand euros pushes you over. If it pushes you over none of them, accept and stop turning it over: it is more money, and there is no figure in the scale that turns that into less.