Malaga tax revenue is growing four times faster than GDP

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The progressive nature of taxes, rising inflation and tourism have led to tax revenues reaching a fifth consecutive record in the province

Cristina Vallejo

Wednesday, 1 April 2026, 10:11

Tax revenue in Malaga province broke five consecutive records in 2025. According to data the Ministry of Finance released on Tuesday, the province's contribution to the public coffers in state taxes reached almost 6.36 billion last year, a 15.6% increase over the previous year. This increase surpasses the national average for tax revenue, which rose by 10.4% to 325 billion, also a new all-time high.

Malaga, however, was not the Spanish province with the largest increase in tax revenue. In Andalucía, the biggest increase was recorded in Jaén (21.6%, exceeding one billion). The province that pushed Malaga lower in the ranking was Alicante (in Valencia), which reached almost 6.5 billion, with a 24.6% increase.

The Costa del Sol was the eighth largest contributor to the treasury in Spain, one position lower than in 2024, after Madrid, Barcelona, Valencia, Seville, the Balearic Islands and A Coruña. With data up to November 2025, Malaga was sixth, ahead of both Alicante and A Coruña, which overtook the Costa del Sol in the final stretch of the year.

The 15.6% increase in tax revenue in Malaga is four times the projected GDP growth for the past year, which, for example, Analistas Económicos de Andalucía estimated at around 3.7%. Provincial data for economic growth last year has not yet been published, but the Andalusian figure is 3.2%, compared to 2.8% for Spain as a whole. Focusing on this latter figure, it is clear that, also at a national level, the increase in tax revenue is significantly higher than the overall economic growth.

It makes sense to compare the growth of tax revenue in a given year with GDP, since the latter measures the value of all goods and services produced by the economy in a year. There are various reasons behind the increase in tax revenue. According to a study by AIReF, the growth in tax revenue recorded since the pandemic is primarily due to economic activity, the growth in employment, wages and corporate profits.

Furthermore, inflation also boosts tax revenue. When prices rise, taxes like IVA bring in more money because they are applied to more expensive goods. Income tax can also increase if tax bands are not adjusted for inflation, meaning people end up paying more as their nominal incomes rise.

In addition, other specific elements can affect income, such as government decisions on the rules governing taxes or the progress of refunds (for example, in 2023, the volume of corporate tax in Malaga was abnormally high).

Professor of Public Finance at the Complutense University of Madrid Jorge Onrubia says that if tax revenue grows faster than the economy as a whole, or GDP, this is primarily due to the progressive nature of income tax. This means that the growth in tax revenue outpaces the increase in income on which the rates are applied: a 1% increase in income generates revenue increases exceeding that percentage. Added to this is the transient population in Malaga (non-residents and tourists) who pay a IVA that, due to demographic factors, can also generate a higher return.

What happens tax by tax?

The tax that yields the greatest returns in the province of Malaga is personal income tax (IRPF), with revenues totalling 2.67 billion in 2025, 17.8% more than the previous year (in Spain as a whole, the increase was limited to 10.1%). Of that figure, the bulk, 1.75 billion, corresponds to withholdings from employment.

Tax officials, in their tax revenue report, attribute this growth to increases in salaries and public pensions, as well as to the increase in the effective tax rate, which offset the fact that salaries and benefits grew less than the previous year. The fact that IRPF revenues in Malaga grew more than in Spain as a whole is related to the fact that while Social Security affiliation in the province rose by 3.46% last year, the national increase did not reach 2.4%.

Regarding corporate income tax, which is levied on business profits, it generated more than 1.17 billion for the state treasury in the province, 14.7% more than the previous year, thanks to both increased gross revenue and fewer refunds. In Spain as a whole, the increase was limited to 8.1%. Tax officials explain that, in addition to improved business results, another factor played a role: the limitation on losses that business groups can carry forward - a measure that reduces the tax burden.

Although its overall contribution was much smaller, the direct tax that saw the greatest increase in revenue in Malaga last year was the non-resident income tax, which rose 29.1% year-on-year to 275 million (compared to a 33.8% increase in Spain as a whole). This tax is levied on taxpayers who do not reside in Spain but earn income there. Tax officials attribute the strong performance of this tax to the high volume of income from real estate.

In terms of indirect taxes, the most important of which is IVA, from which 2.05 billion was collected in Malaga in 2025, 10.1% more than the previous year. This growth is in line with that recorded for Spain as a whole (9.9%). Using data for the entire country, the revenue report explains that, while spending subject to the tax grew by 6% last year, the fact that the tax revenue was ultimately higher than that figure is due to the return to normal rates applied to energy and food products (although, given the renewed turbulence in the Middle East resulting from the Israeli and US attacks on Iran, the government reduced them again a few weeks ago).

Regarding special taxes, although they contribute only 28 million, their collection surged by 59% in the province last year. This contrasts sharply with the national increase, which was limited to 4.3% and which tax officials attribute to the full reinstatement of the electricity tax rate, the rise in the tobacco tax rate and the new tax on electronic cigarette liquids. Aside from these factors, which also apply in Malaga, the key to the increased revenue from this tax here lies in the fact that, while gross income jumped by 40%, refunds remained stable.

All other components of the tax structure grew, such as the tax on foreign trade, which yielded nearly 20 million euros, almost 24% more than a year earlier.

Revenue continues rising in 2026, but with less momentum than in Spain as a whole

The year has just begun, but it is already looking promising - barring the consequences of the escalating conflict and rising prices, as well as the tax measures adopted by the government to ease the energy bill for consumers, which are not yet reflected in the Ministry of Finance's statistics, as these cover only the months of January and February.

During this period, these eight weeks, Malaga has contributed just over 1.2 billion to the state coffers, representing a 9.4% increase compared to the first two months of 2025. In this case, the rise is lower than that recorded for Spain as a whole (13.5%). Among direct taxes, the 7.5% growth in personal income tax revenue to 553 million stands out (an increase also lower than the 8.1% recorded nationally). Meanwhile, corporate tax revenue is currently negative (-5.1 million), as gross revenue is below the refunds that have had to be paid out. In contrast, non-resident income tax continues rising, with a 10.7% increase in the province, reaching nearly 80 million euros in just two months.

Regarding indirect taxes, IVA has already generated 534 million, a 7.6% increase (in Spain as a whole, the rise is close to 10%). Meanwhile, excise duties continue their explosive growth, rising 50% in the first two months of the year after closing 2025 with 40% growth. So far this year, Malaga remains in eighth position in the tax revenue ranking, behind Madrid, Barcelona, Valencia, Seville, A Coruña and Alicante.