The Ministry of Labour has proposed raising the interprofessional minimum wage (SMI) to 1,286 euros gross per month in 14 pays for 2027, which would mean an increase of 65 euros compared to the current 1,221 euros. The rise, of 5.3%, would raise the minimum annual remuneration to 18,004 euros, although it has not yet been approved and its application depends on the royal decree that must be authorized by the Council of Ministers.
The proposal is already subject to public consultation, and interested parties may submit allegations until 16 November. The Government intends to approve the new amount before the general elections on the 29th, after closing consultations with trade unions and business organizations without reaching an agreement on the increase.
The review will also require adapting the tax treatment of the minimum wage. the Ministry of Finance has announced that it will maintain its intention to prevent workers who receive exclusively the SMI from having to pay IRPF, for which it is preparing an expansion of the current deduction. Without that adjustment, part of the wage increase could be allocated to the tax and reduce the improvement in net income.
How much would be earned with the new minimum wage in 2027
The increase proposed by the Ministry of Labour would raise the SMI to 18,004 euros gross per year, regardless of whether companies distribute that amount in 12 or 14 pays. The difference between the two modalities affects the distribution of the salary during the year, but not the total amount that the worker must receive.
| Item | Current SMI 2026 | Proposed SMI 2027 |
|---|---|---|
| Monthly in 14 pays | 1,221 € | 1,286 € |
| Monthly in 12 pays | 1,424.50 € | 1,500.33 € |
| Total gross annual | 17,094 € | 18,004 € |
| Annual increase | — | 910 € |
The amounts for 2027 correspond to the proposal of the Ministry of Labour, pending approval. They are gross amounts for a full-time working day.
In companies that pay 14 pays, the worker would receive 1,286 euros gross in each ordinary monthly instalment and two other extraordinary payments for the same amount. When the extraordinary pays are prorated, the monthly payroll would amount to approximately 1,500.33 euros gross.
The net amount of the payroll will be lower, since from the 1,286 euros gross the Social Security contributions and, where applicable, the IRPF withholdings must be deducted.
How the increase of the SMI will affect IRPF
The Ministry of Finance prepares a modification of the tax deduction to prevent the rise in the minimum wage from forcing those who receive only that remuneration to pay taxes. Minister Arcadi España has confirmed that the Government intends to maintain the criterion applied to the current SMI, although the regulatory adaptation is still pending.
The current deduction would have to increase to adjust to the 18,004 euros annual amount planned for 2027. According to the plans known this Friday, Hacienda is studying raising it to approximately 1,030 euros per year, with the aim of offsetting the tax charge that would correspond to minimum-wage earners.
Without that modification, taxation could reach around 600 euros per year for certain taxpayers who earn the SMI. The figure does not mean that all workers would end up paying that amount, since the IRPF depends on their personal, family, and economic circumstances.
The effective tax exemption also does not eliminate Social Security contributions. Therefore, even if Hacienda approves the announced changes, the 1,286 euros per month will still be a gross amount and not net pay.
The definitive application of the deduction will require a different regulatory modification from the approval of the minimum wage. Until its contents are known, it is not possible to determine with precision how withholding and taxation will be for all the affected workers.
Why Work proposes a 5.3% increase
The proposal from the Ministry exceeds the recommendation of the expert commission that advises the Government, which had calculated an increase of 4.9%, equivalent to 60 euros per month. Work has added another five euros to compensate for the loss of purchasing power accumulated during 2026.
The department headed by Yolanda Díaz has taken as a reference the year-on-year inflation of October, 4.9%, and has incorporated four additional tenths because the average increase in prices during the first ten months of the year, 3.5%, has exceeded the rise in the SMI applied in January, 3.1%.
With this calculation, the Executive intends for workers with the lowest wages to recover the purchasing power lost due to the higher cost of goods and services.
The CCOO and UGT unions had called for a 7% increase, higher than the one finally proposed. Although they have welcomed the improvement announced by Trabajo, they consider the guarantees insufficient to ensure that the increase reaches paychecks in full.
Among their main demands is the modification of the rules for the compensation and absorption of wage supplements, which allow certain companies to neutralize an increase in the SMI through other compensation concepts that their employees already receive. They also call for tax changes and the approval of a stricter time-tracking registration system.
Business organizations CEOE and Cepyme, by contrast, have questioned that the Government process the pay rise before the general elections of November 29 and argue that the decision should correspond to the Executive that results from the elections.
When will the minimum wage for 2027 be approved
The draft royal decree will remain open to submissions until November 16. Once that process is concluded, the Ministry of Labor may submit the text to the Council of Ministers, which has scheduled ordinary meetings on November 17 and 24, before the general elections.
Under the legislation, the Government may set the minimum wage annually after consulting the most representative trade union and business organizations, without needing to reach an agreement with them or to submit the amount to a vote in Congress.
If the current proposal is approved, the 2027 SMI will be set at 1,286 euros gross per month in 14 pay periods, although it will be the final text published in the Boletín Oficial del Estado that will determine its entry into force and the terms of application.