Minimum Interprofessional Salary (SMI) increase in Spain

The government has approved a 3.1% increase on the 2025 figures, to be applied retroactively from 1 January 2026.

The minimum wage for 2026 is set at €1,221 per month (€17,094 per year), representing a 3.1% increase on 2025 and with retroactive effect from 1 January. This increase is mandatory for salaries below €17,094, applies proportionally to part-time contracts and also affects seasonal workers and domestic employees. It involves adjustments to Social Security contributions, the payment of arrears and is exempt from income tax. Meanwhile the government is preparing measures to limit the absorption of the increase by other salary bonuses.

We hereby inform you that the Council of Ministers has approved the Royal Decree establishing the new minimum wage (SMI) for the 2026 financial year. This measure is the result of an agreement between the Ministry of Labour and the trade unions and will be applied retroactively from 1 January 2026.

1. New amounts for 2026

The approved increase of 3.1% compared to the 2025 figures is set as follows:

2. Key aspects to consider

• Retroactive effects and arrears:

Once published in the Official State Gazette, companies must pay the arrears accrued since 1 January 2026. This involves not only paying the worker, but also regularising Social Security contributions.

• Contribution bases:

An increase in the SMI automatically leads to an increase in the minimum contribution base, meaning an increase in the cost of Social Security contributions for companies with employees at these salary levels.

• Absorption and compensation:

Currently, if an employee’s total earnings exceed €17,094 per year, the company can offset the increase. However, the government has announced plans for a legal reform that will limit this ability and prevent the increase in the minimum wage from being ‘absorbed’ by other salary bonuses.

• Tax impact:

The 2026 minimum wage will be exempt from personal income tax. Deductions will be adjusted by regulation to prevent tax withholdings from neutralising the salary increase.

3. Who does it affect?

This increase is mandatory for all workers whose total annual remuneration is less than €17,094.

• It does not affect workers who already earn salaries above this amount, unless their collective agreement specifically links their salary scales to the minimum wage.

• Part-time contracts: The amount will be applied in proportion to the hours worked.

• Linked contracts: It will also affect the limits on wage garnishments and FOGASA (Fund for the Guarantee of Social Security Benefits) compensation amounts

How can our Labour Department help you?

Given the technical complexity of the absorption rules and the imminent regulatory reform, our team is at your disposal to ensure that your company complies with the law and avoids risks with the Labour Inspectorate:

• Payroll audit: We can identify which profiles in your workforce are affected by the new threshold.

• Calculation of arrears: Management of accruals from 1 January 2026 and their corresponding settlement.

• Advice on salary structure: Analysis of bonuses and supplements in light of the new ‘non-absorption’ framework.

• Impact on hiring: Evaluation of the total cost to the company (Social Security + Salary) for your 2026 forecasts.

• Special contracts: Regularisation of training, seasonal and domestic worker contracts.