Reduce the second Irpef rate from 35 percent to 33 percent, expand the income range up to 60 thousand euros. This is the aim of Forza Italia, which submitted a proposal to amend the budget law approved by the majority a few weeks ago. Some 15 billion euros have been allocated for the reform of three Irpef rates: Forza Italia calls for extra efforts to “support middle-class incomes, which have largely supported the country’s economy and at the same time in the past”. For years, they have been the ones most affected by the increase in inflation,” explain Paolo Barelli and Maurizio Gasparri, leaders of the Forza Italia group in the Assembly and Senate.
According to the reform, who pays how much?
With the new budget law for 2025, the government tried to reduce taxes for those with annual income up to 35 thousand euros. A 7 percent contribution reduction in payroll was approved for taxpayers whose earnings are below 20 thousand euros.
| Annual Income Range | Cutting the Tax Wedge | Contribution discount | Increase in Outages | IRPEF rate | Estimated Monthly Savings | Notes |
|---|---|---|---|---|---|---|
| up to €20,000 | 7% of your salary | Yes | NO | 23% | up to €100 | Contribution reduction for low-income earners approved |
| €20,000 – €25,000 | 7% on contributions | Yes | NO | 23% | up to €100 | Contribution discount will continue |
| €25,000 – €35,000 | 6% on contributions | Yes | NO | 23% | up to €100 | Relief gradually reduced to avoid stairs |
| €35,000 – €40,000 | Gradual reduction (bearing) | Partial | Yes | 35% | up to €99 | New “buffer” mechanism to prevent sudden increases in taxes |
| €28,000 – €50,000 | Not applicable | NO | Yes (in case of interruption) | reduced from 35% to 33% | up to €260 | Reducing the intermediate rate from 35% to 33%; maximum savings of approx. €260 |
| over €50,000 | Not applicable | NO | Yes | 43% | Variable | No mitigation applied; Minimum savings for middle-low income earners and more benefits for higher income earners |
But for those on higher incomes, the benefit will be replaced by an increase in employment income deductions. This will lead to a decrease in Irpef. Therefore, social security contributions will not be reduced, but taxes will be reduced. A 7 percent contribution discount will continue to be applied for incomes between 20 thousand and 25 thousand euros, and a 6 percent contribution discount will be applied for incomes between 25 thousand and 35 thousand euros. This progressive system aims to avoid the “staircase effect,” which hinders employers who fail to raise wages to prevent workers from incurring economic penalties.
Tax reform scam
According to the Foundation of Accountants for Employees, cumulatively the savings by cutting the wedge and lowering the rate will come from gross salaries exceeding only 35 thousand euros. According to the published study, the effects will be slightly negative for those below this figure.
However, for the self-employed and retirees the effects are all positive, although their savings are very limited, especially for those with incomes between 30 and 35 thousand euros.
However, the issue that needs to be resolved is related to financial resources, which are currently very limited. The cost to the state will be around 2.2 billion euros, most of which will go into the pockets of taxpayers with higher incomes: with an income of 29 thousand euros, the savings will be only 10 euros a year, while those earning 55 thousand euros can benefit from a discount of up to 670 euros.
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.
