The Short Version
A single American retiree living on $31,000 of Social Security and an $8,400 private pension would pay roughly $7,600 a year in Spanish tax, based on the position Spain's tax authority has taken in binding rulings. That's less than a regular Italian region (about $10,200) but far more than Italy's 7% flat-tax towns (about $2,750) or France (close to $0). Some advisors argue Spain can't tax US Social Security at all, which would drop the bill to about $1,600, but that's a position the Spanish tax authority has rejected.
The rest of this page shows how those numbers are built, which rules they rest on, and how confident we are in each one. It uses the same example retiree as our Italy tax example, so the figures compare directly.
The Example Retiree
- Single US citizen, age 65 or older, not a Spanish citizen
- US Social Security: $31,000 a year
- Private-employer pension: $8,400 a year
- Total income: $39,400, or about €34,560 at an assumed rate of $1.14 per euro
- No withdrawals from a Traditional or Roth IRA (the second half of this page adds them)
- Tax year 2026 rules in both countries
This retiree comfortably clears the income requirement for Spain's non-lucrative visa, the usual route for retirees: 400% of Spain's IPREM benchmark, which works out to €28,800 a year for a single applicant in 2026.
The US Side: $0 (Settled)
For this retiree, the US tax bill is zero. Half of the Social Security ($15,500) plus the pension ($8,400) comes to $23,900, under the $25,000 threshold at which Social Security becomes federally taxable for a single filer, and the pension falls below the 2026 standard deduction. With no US tax to credit against, whatever Spain charges is an added cost.
Who Taxes the Social Security? (Contested)
This is where Spain differs from its neighbors. The US–Spain treaty says US Social Security "may be taxed" in the US, and advisors disagree about what that leaves for Spain.
- Spain's tax authority: taxable in Spain. In binding rulings (V1841-13 and, more recently, V0249-20), Spain's Directorate-General for Taxation has held that Spanish residents must report US Social Security as taxable income at Spain's general rates.
- The alternative view: exempt, but counted for the rate. A number of cross-border firms argue that Social Security is exempt in Spain and only raises the rate charged on your other income.
We use the tax authority's position as the base case. Anyone relying on the lower figure is taking a position Spain has rejected in binding guidance and should expect to defend it.
The private pension is simpler (Settled): under the treaty, it's taxable in Spain as the country of residence.
The Spanish Tax Calculation
Spain's income tax combines a national scale and a regional scale. We use a typical combined scale: 19% up to €12,450, 24% to €20,200, 30% to €35,200, 37% to €60,000, 45% to €300,000, and 47% above that. Madrid charges somewhat less; Catalonia and Valencia somewhat more. Pensions, including Social Security under the tax authority's position, are taxed as employment-type income, which gets a standard €2,000 expense deduction. Everyone gets a tax-free personal allowance, which rises to €6,700 at age 65.
| Step | Euros |
|---|---|
| Pension and Social Security income | €34,560 |
| Minus standard €2,000 expense deduction | €32,560 |
| 19% on the first €12,450 | €2,366 |
| 24% on the next €7,750 | €1,860 |
| 30% on the remaining €12,360 | €3,708 |
| Minus tax on the €6,700 personal allowance (at 19%) | −€1,273 |
| Total Spanish tax | ≈ €6,660 (≈ $7,590) |
That's an effective rate of about 19%, leaving roughly $31,800 a year, or about $2,650 a month, to live on.
Under the alternative view, only the $8,400 pension would be taxed, at the average rate of the whole calculation. Spanish tax would fall to roughly €1,420 (≈ $1,620), leaving about $3,150 a month.
Spain vs. Italy and France
| Spain | Italy, regular region | Italy, 7% town | France | |
|---|---|---|---|---|
| Local tax on $39,400 | ≈ $7,590 | ≈ $10,240 | ≈ $2,760 | ≈ $0 |
| Effective rate | ≈ 19% | ≈ 26% | 7% | ≈ 0% |
| Left to live on each month | ≈ $2,650 | ≈ $2,430 | ≈ $3,050 | ≈ $3,280 |
Spain's headline rates run higher than Italy's, but at this income level its lower first brackets and larger personal allowance for people over 65 produce a smaller bill than a regular Italian region. Spain has no equivalent of Italy's 7% regime for retirees; its well-known "Beckham Law" flat tax is only for people moving there to work.
What Changes With a $1 Million IRA and a $130,000 Roth
Now give the same retiree a $1 million Traditional IRA and a $130,000 Roth IRA, and have them withdraw $60,000 a year from the Traditional IRA. Total income rises to about $99,400 (roughly €87,200). IRA withdrawals are taxable in Spain as the country of residence, at the same general rates.
Because a US citizen roughly pays the higher of the two countries' taxes, and Spain's tax is well above the US tax at this income, Spain sets the bill:
| Spain (tax authority's position) | Spain (alternative view) | |
|---|---|---|
| US federal tax (approx.) | ≈ $10,500 | ≈ $10,500 |
| Spanish tax (approx.) | ≈ $31,900 | ≈ $21,900 |
| Roughly what you actually pay | ≈ $31,900 | ≈ $21,900 |
For comparison, the same retiree pays roughly $36,300 in a regular Italian region, and about $10,500 in an Italian 7% town or in France, where the US tax is effectively all that's left.
The wealth tax (Settled on the rules, Contested for IRAs). Unlike Italy and France, Spain has a full annual wealth tax on residents' worldwide net assets. The national default exempts the first €700,000 per person, plus up to €300,000 for a main home, but each region sets its own rules. For about €990,000 in IRAs, the annual bill varies sharply by where you live:
| Region | Approximate annual wealth tax |
|---|---|
| Madrid, Andalusia, Cantabria, Extremadura, La Rioja, Murcia (100% rebate below €3 million) | €0 |
| Valencia (€1 million exemption, rising to €2 million from the end of 2026) | €0 |
| Regions using the national default | ≈ €700 |
| Catalonia (€500,000 exemption, higher rates) | ≈ €1,750 |
Spanish pension plans are exempt from the wealth tax, but most advisors assume a US IRA counts toward it, and there's no ruling saying otherwise. Above €3 million, a separate national "solidarity" tax applies regardless of region. Accounts abroad worth more than €50,000 must also be reported annually on Modelo 720.
The Roth IRA (Contested). Spain doesn't recognize the Roth's tax-free status. Tax authorities generally tax the earnings portion of withdrawals as savings income at 19–30%; some advisors argue the whole withdrawal should be taxed at general rates. Details are in our Spain retirement account guide.
What People in This Situation Commonly Do
- Choose the region deliberately. In Spain the region matters for the wealth tax, the income tax scale, and inheritance tax. Madrid and Andalusia are the usual picks for people with larger balances.
- Draw down before moving. With no retiree flat-tax regime, some people take larger IRA withdrawals or Roth conversions while still US residents, paying only US tax, before Spanish rates apply.
- Weigh Spain against France for IRA-heavy plans. For someone planning large Traditional IRA withdrawals, France's treaty treatment can save tens of thousands of dollars a year compared with Spain.
- Plan around the 183-day rule. The non-lucrative visa expects you to live in Spain at least 183 days a year to renew, and it doesn't allow working, including remotely. Heavy travelers and anyone with ongoing work income should factor that in.
What This Example Doesn't Cover
- Government pensions follow different rules. A US federal, state, or local government pension is generally taxable only in the US under the treaty (unless you're a Spanish national), though Spain may still count it when setting your rate.
- Healthcare isn't included. The non-lucrative visa requires private health insurance with no copays or waiting periods. After a year of residence, retirees can usually buy into the public system through the convenio especial, currently roughly €157 a month at 65 or older. Compare international health plans
- Currency moves the numbers. Spanish tax is calculated in euros on dollar income. See what converting your Social Security with Wise would cost
- Regional rates vary. We used a typical combined regional scale; your actual rates depend on your region of residence on December 31.
- Inheritance tax. Spain taxes inheritances by region, with large reliefs for children in some regions, including Madrid and Andalusia.
How We Built These Numbers
Spanish figures use a typical combined national and regional income tax scale for 2026, the standard €2,000 expense deduction for employment-type income, and the €6,700 personal allowance for taxpayers 65 or older. US figures use 2026 federal brackets, the standard deduction including the age-65 additions, and the Social Security taxability thresholds. All conversions use $1.14 per euro. Figures are rounded and meant to show the size of the differences, not to serve as a tax quote.
Sources: US–Spain Income Tax Convention and 2013 Protocol (in force 2019); Spanish Directorate-General for Taxation binding rulings V1841-13 and V0249-20; Spanish income tax law (Ley 35/2006, IRPF); Spanish wealth tax law (Ley 19/1991) and 2026 regional rules; Royal Decree 1155/2024 (non-lucrative residence requirements); IRS 2026 inflation adjustments.
This is general information, not tax advice. Spain's treatment of US Social Security is contested, tax rules in both countries change, and regional rules vary. Confirm your situation with a US–Spain cross-border tax professional before making relocation decisions.