The Budget Law 2025 in Italy replaces the Budget Law 2024 and introduces several significant reforms and incentives to strengthen the economy, improve employment opportunities, and provide support for families. This article summarizes the key aspects of the legislation, highlighting innovations in critical areas such as taxation, labor, family support and housing.

Reducing the Tax Burden

•  Reducing the Tax Wedge: For employees earning up to € 20,000, there is a portion of income that is exempt from taxation, calculated using decreasing percentages across income brackets as earnings increase. For employee incomes ranging from € 20,000 to € 40,000, a fixed exemption of € 1,000 applies for incomes up to € 32,000, with a gradually decreasing exemption for incomes exceeding € 32,000, ultimately reaching zero at the € 40,000 threshold.

•  Deductions Reform: They will be reorganized to consider the greater benefits for larger families. 

•  The IRPEF Rates will Remain Unchanged: 23% for income up to €28,000; 35% for income over €28,000 and up to €50,000, and 43% for income exceeding €50,000. Any potential changes will be deferred to a future structural reform.

•  Capital Gains from Cryptocurrencies: Taxation increases from 26% to 42%.

Employment Policies

•  Employment Incentives: Bonuses for hiring young people and women are confirmed at 30%, with facilities for companies located in Special Economic Zones (SEZs).

•  Productivity Bonuses: 5% preferential rate for 2025-2027.

•  Fringe Benefits: Increase of tax exemption limits to EUR 2,000 for employees with children and to EUR 1,000 for other employees. The limit for waiters' tips received from customers is increased from 25% to 30%.

Support for Families

•  Birth Bonus: €1,000 for families with an ISEE of less than €40,000.

•  Bonus Crèche: This program is available for children up to the age of three and can be utilized in public or private facilities, as well as for home care. The contribution is adjusted based on the ISEE (Equivalent Economic Situation Indicator): it amounts to €3,000 per year for an ISEE of up to €25,000; it decreases to €2,500 for an ISEE of up to €40,000 and is further reduced to €1,500 for an ISEE exceeding €40,000. This year, when calculating the ISEE, the amount of the single allowance, which has adversely affected many families in the past, is excluded.

•  Parental Leave: Parental leave has been enhanced to promote work-life balance. Specifically, the allowance has been increased to 80% of the salary for an additional month, applicable until the child reaches six years of age.

Tax Incentives for Housing

•  The Extension of Bonuses for Building Renovations and Furniture Purchase is set at 50%.

•  Furniture Bonus 2025: Taxpayers who already benefit from the deduction for building renovation work are eligible for an additional deduction from their gross tax, capped at €5,000, for the purchase of furniture and large household appliances. These appliances must be rated at least Class A for ovens, Class E for washing machines, washer-dryers, and dishwashers, and Class F for refrigerators and freezers, provided that the energy label is available.

•  New Bonus for Household Appliances 2025: A subsidy is available to end consumers for the purchase of energy-efficient household appliances (Class B or higher) manufactured in Europe. The bonus is limited to one appliance per household, contingent upon the proper disposal of the old appliance. The subsidy covers 30% of the appliance's cost, up to a maximum of €100 per purchase. This amount increases to €200 for households with an ISEE of less than €25,000.

In conclusion, Italy's Budget Law 2025 represents a comprehensive and multifaceted strategy designed to stimulate economic growth, enhance employment opportunities, and offer essential support to families. The extensive array of tax measures and incentives underscores the government's dedication to addressing the diverse needs of Italian citizens, thereby establishing a solid foundation for a prosperous future for the nation.

PHC  Advisory  is a company of  DP Group: an international professional services conglomerate of companies with approximately 100 experienced professionals worldwide. We offer comprehensive services in tax, accounting, and financial consulting, including financial supervision, financial audit, internal audit, internal control over financial reporting, and support for audited financial statements and annual audits, ensuring clients' financial transparency and compliance. 

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The content of this article is provided for informational purposes only, financial advice must be tailored to the specific circumstances on a case-by-case basis, and the contents of this article do not legally bind PHC Advisory with the reader in any way. 

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