December 29, 2023 – The Italian government has recently approved a series of tax reforms affecting 25 million taxpayers, specifically targeting adjustments to the Personal Income Tax (Irpef). According to predictions, this reform is expected to bring an average annual benefit of €544 to each eligible taxpayer, with the average benefit for household types reaching €611.
The government enacted four legislative decrees covering collaborative compliance, tax disputes, taxpayer rights, and a comprehensive revision of income tax. Notably, the three tax rates for Irpef have been adjusted for different income levels: 23% (up to €28,000), 25% (€28,000 to €50,000), and 43% (over €50,000).
The key feature of this tax reform is the consolidation of the first two income brackets, reducing the number of tax brackets. Additionally, local and municipal supplementary tax rates will be reconfigured based on these adjustments, accompanied by redistributed deduction measures.
According to estimates from the Parliamentary Budget Office, the average benefit for taxpayers is projected to be €190, with over half of the beneficiaries having incomes exceeding €28,000. Furthermore, high-income earners above €500,000 will receive a €260 tax reduction, involving partial non-medical deductions.
It is noteworthy that the government has extended the implementation period of tax reduction measures and restructured the Irpef tax rate to ensure an average annual benefit of €544 for each eligible taxpayer, constituting 2.3% of their annual income. For typical families, this benefit will increase to €611, with northern families being the primary beneficiaries in over half of the cases.
Moreover, according to a report by Prometeia, the government plans to continue reducing social insurance contributions for employed workers in the new year. The social security contribution rates will be reduced by 7 and 6 percentage points for employees with monthly salaries below €1,923 (annual salary of €25,000, including 13 months) and between €1,923 and €2,692, respectively.
For women with three children, the government will implement a full exemption policy, subject to employment conditions, including the youngest child not exceeding ten years of age.
In summary, Prometeia's report indicates that tax reduction measures will result in an average annual tax reduction of €777 for 14.2 million employed workers, constituting 4.1% of their net personal income. While the impact of this tax reduction varies across different income brackets, it is particularly significant for high-income earners, especially for women, exceeding €500,000.
Taking into account the adjustments to Irpef tax rates and the reduction in social security contribution rates, the government expects an average net benefit of €544 for eligible taxpayers. For the overall taxpayer population, the average impact of this net benefit is 1.8%. This tax reform aims to create a more equitable and sustainable tax system for Italian society.
The government enacted four legislative decrees covering collaborative compliance, tax disputes, taxpayer rights, and a comprehensive revision of income tax. Notably, the three tax rates for Irpef have been adjusted for different income levels: 23% (up to €28,000), 25% (€28,000 to €50,000), and 43% (over €50,000).
The key feature of this tax reform is the consolidation of the first two income brackets, reducing the number of tax brackets. Additionally, local and municipal supplementary tax rates will be reconfigured based on these adjustments, accompanied by redistributed deduction measures.
According to estimates from the Parliamentary Budget Office, the average benefit for taxpayers is projected to be €190, with over half of the beneficiaries having incomes exceeding €28,000. Furthermore, high-income earners above €500,000 will receive a €260 tax reduction, involving partial non-medical deductions.
It is noteworthy that the government has extended the implementation period of tax reduction measures and restructured the Irpef tax rate to ensure an average annual benefit of €544 for each eligible taxpayer, constituting 2.3% of their annual income. For typical families, this benefit will increase to €611, with northern families being the primary beneficiaries in over half of the cases.
Moreover, according to a report by Prometeia, the government plans to continue reducing social insurance contributions for employed workers in the new year. The social security contribution rates will be reduced by 7 and 6 percentage points for employees with monthly salaries below €1,923 (annual salary of €25,000, including 13 months) and between €1,923 and €2,692, respectively.
For women with three children, the government will implement a full exemption policy, subject to employment conditions, including the youngest child not exceeding ten years of age.
In summary, Prometeia's report indicates that tax reduction measures will result in an average annual tax reduction of €777 for 14.2 million employed workers, constituting 4.1% of their net personal income. While the impact of this tax reduction varies across different income brackets, it is particularly significant for high-income earners, especially for women, exceeding €500,000.
Taking into account the adjustments to Irpef tax rates and the reduction in social security contribution rates, the government expects an average net benefit of €544 for eligible taxpayers. For the overall taxpayer population, the average impact of this net benefit is 1.8%. This tax reform aims to create a more equitable and sustainable tax system for Italian society.
