Italy's 2024 budget introduces a series of significant reforms and incentives aimed at bolstering the economy, enhancing employment opportunities, and providing support to families. This article delves into the key aspects of the budget, highlighting its impact on the construction sector, tax benefits, childcare support, and employment-related measures.

• Construction Sector Incentives

One of the notable features of the 2024 budget is the revision of the Superbonus for construction. This incentive, aimed at encouraging building renovations, is set to decrease from 70% in 2024 to 65% in 2025, marking the final year of its availability. Moreover, the budget extends the bonus for removing architectural barriers until 2025, offering a 75% subsidy, but with stricter criteria for eligible projects. The furniture bonus, designed to stimulate spending on household furnishings, undergoes a significant change. The maximum deductible spending limit is reduced from 8,000 euros in 2023 to 5,000 euros in 2024, a move that may impact consumer spending in this sector.

• Irpef Bonus and Daycare Support

Continuing the legacy of the Renzi bonus, the 2024 budget renews the Irpef (Italian Individual Income Tax) bonus for employees earning up to 28,000 euros annually, offering a subsidy of up to 1,200 euros per year. This measure is part of a broader strategy to provide relief to middle-income earners. In a bid to support families with young children, the budget enhances the daycare bonus. This augmented aid is particularly significant for families with children under three years of age, suffering from severe chronic diseases. The increase sets the annual bonus at 2,100 euros, with an additional 600 euros for families with an ISEE (Equivalent Economic Situation Indicator)  value under 25,000 euros, and 1,100 euros for those with an ISEE between 25,000 and 40,000 euros. The total annual voucher amount can reach 3,600 euros, offering substantial relief to eligible families.

• Employment Measures and Productivity Bonuses

The budget confirms the continuation of the tax-contributory wedge cut for medium-low income groups, a measure initially introduced by previous administrations and reinforced under the Meloni government. For 2024, this includes a 6% exemption for salaries up to 35,000 euros gross annually and a 7% exemption for salaries up to 25,000 euros gross annually. This policy is aimed at reducing the tax burden on employees and encouraging job retention and creation. The budget also revises the taxation of productivity bonuses. In 2024, the tax rate for these bonuses is reduced to 5%, applicable to sums up to 3,000 euros, benefiting workers with salaries up to 80,000 euros. This adjustment is likely to incentivize employers to reward productive employees while fostering a more motivated workforce.

• Fringe Benefits and Special Provisions for the Tourism Sector

The 2024 budget raises the exemption limit for fringe benefits from 258.23 euros to 1,000 euros (2,000 euros for employees with dependent children). This exemption encompasses various costs, including utilities and housing expenses, enhancing the overall compensation package for eligible employees. Additionally, employees in the tourist-hotel sector receive a special treatment of 15% of gross salaries for night and holiday overtime work from January 1 to June 30, 2024. This provision is targeted at employees earning up to 40,000 euros, aiming to support one of Italy’s vital economic sectors.

• Support for Working Mothers and Public Employment Contracts

A groundbreaking initiative in the 2024 budget is the total contribution exemption for working mothers with at least two children. For the period 2024-2026, this includes a full exemption from employee contributions for permanent employees who are mothers of three or more children until the youngest child turns eighteen. In 2024, this exemption is also extended to mothers of two children until the youngest child reaches ten years of age. The budget sets aside 3 billion euros for 2024 and 5 billion euros from 2025 for national public employment contract negotiations. Starting in 2024, the contractual holiday allowance is increased by 6.7 times its annual value, with an immediate advance payment made in December 2023 to state employees. This increment signifies a significant investment in the public sector, ensuring a more robust compensation package for state employees.

In conclusion, Italy’s 2024 budget represents a multifaceted approach to stimulating economic growth, supporting employment, and providing essential aid to families. The comprehensive range of tax and incentives measures demonstrates the government's commitment to addressing the diverse needs of Italian citizens and laying a solid foundation for the country's future prosperity.

At PHC Advisory, we can offer you full support on matters regarding doing business in Italy and Asia, or any other issues your business may face. If you would like to know more about policies relevant to your business in Italy or Asia, please contact us at info@phcadvisory.com. 

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If you want to know more about tax regulations in Italy, please have a look at our previous article: 

• Taxes in Italy: Updates for 2024