Valencia: the highest income tax in Spain, and the lowest wealth tax.
The Valencian Community charges more income tax than any other common-regime region. It also exempts the first two million euro of net wealth, which is four times what Madrid exempts and the most generous threshold in Spain. Both of those changed in August 2026, and most comparison tables have not caught up.
The first two articles in this series compared Catalonia and Madrid, which is the comparison everybody makes. Valencia is more interesting than either, because it does not sit on the line between them. It taxes income harder than Catalonia and wealth more lightly than Madrid, which means the answer to "is Valencia expensive?" depends entirely on where your money comes from.
That position is new. Ley 5/2026 of 31 July, published on 10 August 2026 and in force from the 11th, cut the income tax scale and doubled the wealth tax threshold in the same instrument. The income tax changes apply to the whole of 2026.
Pick the profile that fits and see which of the three comes out ahead, and which tax decides it. This is a directional comparison built on the verified headline figures for each region, not a computation of your own bill.
What the August law did.
The three regions, on the numbers that are settled.
| Madrid | Catalonia | Valencia | |
|---|---|---|---|
| Regional scale, lowest | 8.5% | 9.5% | 8.8% |
| Regional scale, highest | 20.5% | 25.5% | 29.35% |
| Combined top marginal | 45.0% | 50.0% | 53.85% |
| Number of brackets | 5 | 8 | 11 |
| Wealth tax exempt minimum | 700,000 | 500,000 | 2,000,000 |
| Wealth tax relief | 100%, limited by the state tax | None | None, but the threshold does the work |
The famous 54 per cent is 53.85, and only in Valencia.
For years the top combined rate here was 54.0 per cent, and it was routinely attributed to "Catalonia or Valencia". Catalonia has never been at that level — it tops out at 50. And since the August 2026 cut, Valencia is at 53.85, falling to 53.75 in 2027. Small differences, but if a rate table still says 54 for two regions it has two errors in one line.
The scale, from the consolidated text.
Eleven brackets, set by article 2 of Ley 13/1997 as amended by article 18 of Ley 5/2026. These are the figures in the official consolidated text, and the cumulative quota column checks out against the rates in every bracket.
| Taxable base from | Cumulative quota | Rate on the rest | Combined with the state |
|---|---|---|---|
| 0 | 0 | 8.8% | 18.3% |
| 12,000 | 1,056 | 11.7% | 21.2% |
| 22,000 | 2,226 | 14.6% | 29.6% |
| 32,000 | 3,686 | 17.0% | 32.0% |
| 42,000 | 5,386 | 19.4% | 37.9% |
| 52,000 | 7,326 | 21.9% | 40.4% |
| 62,000 | 9,516 | 24.4% | 46.9% |
| 72,000 | 11,956 | 26.1% | 48.6% |
| 100,000 | 19,264 | 27.35% | 49.85% |
| 150,000 | 32,939 | 28.35% | 50.85% |
| 200,000 | 47,114 | 29.35% | 51.85%, and 53.85% above 300,000 |
200,000 euro, not 175,000.
Valencia reaches its top regional rate earlier than Catalonia reaches its own top rate, but later than the secondary tables suggest. This is the kind of detail that is wrong in most published summaries, and it is why the figures above come from the consolidated law rather than from a comparison site.
8.8% to 29.35%
In force for the whole of 2026 under article 18 of Ley 5/2026, applied retroactively to 1 January.
8.7% to 29.25%
A second, smaller cut already written into the third transitional provision of the same law, taking the combined top to 53.75 per cent.
Valencia is not expensive until it suddenly is.
Running the four scales against each other produces a result that the headline rates hide completely. Below the middle of the scale Valencia is cheaper than Catalonia and cheaper than Andalusia, because its entry rate of 8.8 per cent is the second lowest in Spain and its early brackets are gently spaced.
| Taxable base | Valencia | Andalusia | Catalonia |
|---|---|---|---|
| 30,000 | 5,961 | 6,070 | 6,183 |
| 40,000 | 9,281 | 9,406 | 9,661 |
| 60,000 | 17,013 | 16,806 | 17,336 |
| 80,000 | 26,479 | 25,806 | 26,136 |
| 150,000 | 61,124 | 57,306 | 58,436 |
Valencia becomes the dearer option at about 54,000 euro.
That is where it overtakes Andalusia. It does not overtake Catalonia until around 72,600 euro of general taxable base. Below those lines the region with the highest top rate in Spain is one of the cheaper places to earn a living. Above them the eleven-bracket scale climbs faster than anyone else's and the gap opens quickly.
This is what a steep scale means in practice, and it is why a single top-rate figure is such a poor way to compare regions. A teacher and a partner in a law firm living in the same Valencian street are in two different tax stories.
Deductions worth knowing.
- Health costs. Dental, mental health and optical expenses, up to 150 euro.
- Sport and physical activity. 30 per cent of qualifying spending, up to 150 euro — unusual among Spanish regions.
- Young children. Between 660 and 1,100 euro for children under five, which is at the generous end nationally.
- Rent on a main home. 15 to 20 per cent for young tenants.
- School materials and a set of family deductions that together partly offset the higher scale for households with children.
This matters more than it sounds. Valencia pairs the heaviest scale with one of the fuller sets of regional deductions, so the gap against Madrid for a family with young children is narrower than the headline rates imply — and wider for a single high earner with no deductions to claim.
Is Valencia really the most expensive region for income tax?
Why would anyone with money move to Valencia rather than Madrid?
Is the wealth tax change permanent?
Does the 2027 cut change anything material?
What about the family business relief?
Hardest on salaries. Gentlest on capital.
Work out which side you are on ↗Alexander Baranov
Seventeen years designing and delivering cross-border corporate structures — incorporation, tax, holding, banking and market entry — for founders and companies expanding into Spain and the EU. Author of professional books on entering the Spanish market.
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