Tax reform in the Valencian Community 2026: key points of the IRPF cut and simplification of Gift Tax

The Valencian regional government has unveiled its 2026 Fiscal Measures Bill, with significant changes: a retroactive cut in the regional IRPF (personal income tax) tier from 1 January, simplification of Gift Tax, and stronger protection of the family business in Inheritance Tax. We review the key implications for individuals and family-owned companies.

A genuinely expansive regional tax reform

The Generalitat Valenciana (regional government of the Valencian Community) has presented its draft Fiscal Measures Bill for 2026, introducing significant tax changes that affect both the financial planning of individuals and the wealth structure of family-owned businesses in the region. The tax department at Bufete Padilla outlines the key points worth keeping in mind.

> Practical note: this is still a draft bill under parliamentary procedure. The final wording may change. All figures and rates should be confirmed against the version eventually published in the regional official gazette (DOGV).

1. Retroactive IRPF (personal income tax) cut

The adjustment in the regional bracket of IRPF will benefit only taxpayers with incomes below €72,000 per year. For the lower brackets — specifically up to €12,000 — the rate is cut to 8.80 %.

Crucially, the measure will apply retroactively from 1 January 2026, with the policy aim of protecting the purchasing power of low- and middle-income households against inflationary pressure.

Practical implications:

  • Taxpayers will most likely see the adjustment reflected in the 2026 income tax campaign.
  • It is advisable to review the withholdings applied during the year, particularly on payroll and business income.
  • Self-employed individuals and professionals should align the impact with their quarterly instalment payments.

2. Simplification of Gift Tax (Impuesto de Donaciones)

The new bill removes bureaucratic hurdles and reduces administrative costs. The obligation to formalise gifts before a notary is eliminated for donations below €4,000. From now on, the use of digital signature will be fully valid, provided that the nature of the legal transaction allows it.

What changes in practice:

  • Small intra-family gifts (meaningful presents, ad hoc support, transfers treated as gifts) can be formalised in a more flexible way.
  • Notarial and management costs for low-value transactions are reduced.
  • Digital signature consolidates as a valid channel, which simplifies execution for both residents and non-residents in the region.
  • The obligation to file the tax return within the legal deadline remains, even where the taxable base is fully relieved.