By increasing the Irpef brackets from four to three, we guarantee tax benefits to more than 23.5 million Italians, including retirees. The remodulation of income tax that the Meloni government is dreaming of would cost 4-5 billion euros, with at least another 9 billion euros added to extend the cut to the tax wedge. According to Deputy Economy Minister Maurizio Leo, the total expenditure to be taken into account will be around “14 billion” euros. Resources that the government must find within a few months if it wants to include the measure in the budget law.
Meloni’s words, speaking today at the Festival delle Regioni in Turin, confirm that resources should be sipped. The Prime Minister also said that “Margins for maneuver are limited” due to the “legacy” accumulated by a policy that “had a very short horizon” and “sometimes favored easier choices over those dictated by reason”. “We have concentrated the few resources we have on increasing the purchasing power of families,” the Prime Minister added. “And we want to make the cut in the tax wedge structural. We don’t have to do everything right away – Meloni admitted – but we can plan a lot of interventions step by step”. Considering the circumstances, a postponement of the Irpef reform until 2025 cannot be ruled out.
How will Irpef change?
On the contrary, if the government manages to find funds, a significant part of Italians will be able to count on a small tax benefit from next January. Draghi’s government had already changed Irpef in 2022, reducing the brackets from 5 to 4 and bringing the two rates of 38 percent and 27 percent to 35 percent and 25 percent. Now the majority want to go one step further and reduce the rate applied to incomes between 15 and 28 thousand euros from 25 percent to 23 percent. In this way, we actually achieve the union of the first two parentheses.
Rates in effect until 2022
up to 15 thousand euros | 23% |
15 thousand to 28 thousand euros | %27 |
From 28 thousand to 55 thousand euros | 38% |
From 55 thousand to 75 thousand euros | 41% |
over 75 thousand euros | 43% |
Irpef rates after Draghi reform
up to 15 thousand euros | 23% |
15 thousand to 28 thousand euros | 25% |
From 28 thousand to 50 thousand euros | 35% |
over 50 thousand euros | 43% |
Reform hypothesis for 2024
up to 28 thousand euros | 23% |
From 28 thousand to 50 thousand euros | 35% |
over 50 thousand euros | 43% |
Who benefits from compounding rates?
All taxpayers earning more than 15 thousand euros, including high-income earners, will benefit from the interest rate reduction. The Irpef mechanism actually ensures that the higher rate is activated only for the income share of the relevant tranche. For example, a taxpayer with an income of 20 thousand euros pays 23 percent for the part of his income between 0 and 15 thousand euros, and 25 percent for the part exceeding 15 thousand euros (in this case 5 thousand euros). With this system, a cut in rates for the lowest earners would necessarily have a cascading effect on the highest earners. It goes without saying that the only people who will not benefit from this reform hypothesis will be workers and pensioners in the first group, that is, those with incomes between the tax-free area (just over 8,100 euros) and 15 thousand euros.
What are the amounts?
How much will taxpayers save? Let’s try to make some calculations. A worker with a net income of 20 thousand euros, excluding various deductions and deductions, today pays 4 thousand 700 euros in Irpef to the tax offices. If the consolidation of rates takes place, you will be able to pay 4,600 euros with an annual tax advantage of 100 euros from January 1, 2024. The worker or retiree in question will pay just under 17 euros a month with an income of 25 thousand euros, and 5 thousand 750 euros instead of 5 thousand 950 euros with a savings of 200 euros. It still is. The tax advantage of the taxpayer who declares 28 thousand euros will be 260 euros (less than 22 euros per month). The same savings will be offered to higher income groups.
Income | Annual tax benefit (excluding deductions and deductions) |
up to 15 thousand | 0 |
20,000 | 100 euros |
25,000 | 200 euros |
Income of 28,000 and above | 260 euros |
The government is seeking resources to include tax reform in the budget and therefore increase wages and pensions as early as 2024. But it is not certain that the realignment of rates will be truly successful. The priority, repeated several times by the executive, remains the extension of the tax wedge cut in force for around 14 million workers since July (7 points less for incomes up to 25 thousand euros and 6 points less for those up to 35 thousand euros).
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Source: Today IT

Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.