Strategie per ridurre il reddito e ottimizzare l’imposizione fiscale

How to Lower Income to Pay Less Taxes

Reducing taxes allows you to have more money available, thus increasing your purchasing power.
While deductions are commonly used to lower taxes, there is also a way to decrease the taxable income on which taxes are calculated.

In Italy, the tax burden is high, especially for those living off their work or pension.
Finding a way to pay fewer taxes (especially on earned income) is the best path to ensure greater financial availability.

Less Taxes Through Deductions and Deductions

Most taxpayers rely on deductions to lower the amount of due IRPEF.
Deductible expenses are subtracted from the tax due.
For example, if one must pay €8,450 of IRPEF for 2023 but is entitled to €2,137 in deductions (considering medical, educational, funeral, home renovation expenses, mortgage interest, etc.), the tax due decreases to €6,313.

It’s important to note that the deductible amount is subtracted directly from the tax due, and for employees and pensioners, it translates into a refund since IRPEF has already been withheld monthly from paychecks or pension slips.

One often-overlooked tool is the deduction, which lowers not only the taxes due directly but also the income on which they are calculated.
This tool serves a dual purpose: it not only helps pay fewer taxes but can also, in some cases, move one to a lower income bracket with a more favorable IRPEF rate.

How to Lower Income and Pay Less Taxes

The deduction directly affects the taxpayer’s income, reducing it and consequently paying fewer taxes.
It involves expenses that are subtracted (totally or up to a maximum amount established by law) from the taxpayer’s overall income.
These deductible expenses include:

• social security and welfare contributions;
• contributions and premiums for complementary and individual pension schemes;
• periodic alimony to the former spouse;
• social security contributions for domestic and family service workers;
• contributions and donations to religious institutions;
• medical and specific care expenses for persons with disabilities;
• contributions to supplementary funds of the National Health Service;
• contributions to recognized NGOs operating in developing countries;
• all types of charitable donations.

Let’s consider a practical example to understand how deductions work.
A employed worker has a gross total income of €34,000.
They paid €4,000 to a pension fund (fully deductible) and redeemed a year of university studies for pension purposes, a total expense of €6,200 paid in a lump sum.

The €10,200 deductible expense subtracted from their gross total income means taxes are calculated on €23,800 instead of €34,000.
How much do they save?

Without the deduction, IRPEF would be calculated as follows:
– 23% on €28,000, equals €6,440;
– 35% on €6,000, equals €2,100.
Without the deduction, the gross tax is €8,540.

Applying the deduction, taxes are calculated on €23,800 at a rate of 23%, amounting to €5,474, resulting in savings exceeding €3,100.
It’s worth noting that not only is the income on which the taxes are calculated reduced, but the deduction also bypasses applying the 35% rate on the excess over €28,000 (since, after deducting expenses, the income no longer exceeds this amount).