When it comes to knowing the monthly income of an employee, it is necessary to be clear about the difference between gross salary and net salary. The first is the total income that the worker receives without applying the mandatory reductions, while the second is the amount that is finally deposited from the payroll in his bank’s checking account. Now, when we talk about minimum wage, is it gross or net?
It should be remembered that all salaries are subject to tax withholdings. In addition, the worker must also contemplate the different extras that are also recognized in the agreement of his sector due to his task (seniority, night shifts, work trips…). Among the parts that are subtracted from the gross salary are the contributions to Social Security and the part of the Personal Income Tax (IRPF) depending on their family situation.
The Government approved on February 14, 2023 a new increase in the Minimum Interprofessional Wage for 2023 to 1,080 euros, a measure that has been agreed with the CCOO and UGT unions, but which ran into opposition from the CEOE and Cepyme employers, which agreed to an increase of a maximum of 4%. The increase will take effect retroactively to January 1 of this year.
In total, the rise in the SMI will be 8% for the worker in the 14 payments of this year, that is, 15,120 euros per year.
However, the 1,080 euros will not be the amount that the SMI workers enter on their payroll, since the payment of taxes and Social Security will be deducted. To obtain the net minimum salary, contributions to Social Security (6.45% of the payroll) must be subtracted from this figure, as well as personal income tax deductions, which will depend on the type of employment contract and other factors. as the personal situation of the employee.
2023 also starts with a new payroll tax. This is the Intergenerational Equity Mechanism (MEI) that aims to guarantee the purchasing power of pensions.
From this month of January, the MEI represents a 0.6% increase in contributions for common contingencies, distributed between the company and the worker with the same distribution as in social contributions. Specifically, 0.5 of the contribution must be assumed by the company and 0.1% by the worker.
In the case of the self-employed, the MEI is variable. Compared to companies and employed workers, which is around 12 euros in salaries of 2,000 euros per month, for the self-employed worker it will be 5 euros per month.
In principle, this payroll discount will be valid for 10 years, until 2033.
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