The president Luis Abinaderacknowledged yesterday Tuesday that the salary indexation what he commands Tax Code It is a “fair and necessary” measure, but he warned that its application would imply a decrease in the Government’s income, which would force a reduction of funds allocated to sensitive areas due to their social impact.
“If we do it, we must say from whom we take the resources: to healthto education?”, Abinader questioned, by highlighting that the issue is under study and that a solution will be sought that does not compromise the budget balance.
The president explained that the Government analyzes how to apply indexing in the most balanced way possible, aware of the fiscal impact that it would represent. He indicated that the issue is under study and a solution will be sought that does not compromise the budget balance.
The president admitted that the salary indexationwhich consists of adjusting the sections of income tax according to annual inflation, does not apply since 2017, despite the fact that the Tax Code orders its automatic update every year.
He added that the measure had been contemplated within the proposal of the failed tax reform which the Government proposed last year, but which was rejected by sectors that now demand indexation.
It will not be discussed in the 2026 Budget
In the National Congress, the vice president of the bicameral commission that studies the General State Budget for 2026, the Senator Pedro Tineospecified that the piece sent by the Executive Branch does not contemplate the salary indexationsince the topic is studied separately in a bill which is located in the finance commission of the Senate.
tineo indicated that, therefore, the debate about updating the wages is not part of the budget analysis current.
Project is studied
That projectauthored by the opposition senator Felix Bautista and deposited in March 2025, proposes to modify article 296 of the Tax Code to update the sections of personal income tax. If approved, income levels exempt and progressive rates would change.
In current legislation, the salaried pay on your net taxable income the following annual fees:
- Up to 399,923.00 pesos annually: exempt.
- From 399,923.01 to 599,884.00 pesos: 15%.
- From 599,884.01 to 833,171.00 pesos: 20%.
- From 833,171.01 pesos onwards: 25%.
He project under discussion proposes raising those sections to reflect the cumulative effect of inflation since 2017. The new scale it would look like this:
- Up to 558,232.00 pesos annually: exempt.
- From 558,232.01 to 837,347.00 pesos: 15%.
- From 837,347.01 to 1,162,982.00: 20%.
- From 1,162,982.01 pesos onwards: 25%.
He Tax Code current, in paragraph I of article 296, provides that the scale must be adjusted each year according to the inflation published by the Central Bankbut that provision has not been complied with for eight years.
The lack of indexing caused the oppositionespecially the senator of the People’s Force, Omar Fernandezwill claim its application for the high costs of the basic basket familiar.
