Detrazioni fiscali

No tax area, what it is and who doesn't pay taxes

What is the no tax area? Who doesn't pay taxes? The no tax area is an income threshold within which taxes are not due.
There is, for example, the no tax area for the University and all students who have an ISEE value within that established limit are not required to pay university fees.
However, there is also a similar threshold for Irpef and within certain annual incomes, personal income tax does not have to be paid.
It is difficult to understand why Irpef is not due within those limits.
It should be noted that these are not incomes exempt from Irpef, since even the sums that fall within the no tax area are subject to taxation, but due to the mechanism envisaged by the deductions the taxes due are cancelled.
Let's try to clarify this concept and understand how Irpef taxation works in 2023 and what is expected for next year.
read also Employee deductions 2023: how the calculation changes and you save on taxes No tax area, what is it and who doesn't pay taxes What is the no tax area? Why is there a no tax area? No tax area 2023 Deductions, how do they affect the no tax area? When will the no tax area rise? How will the no tax area change in 2024? What is the no tax area? For those who are not familiar with tax matters, a clarification on the concept of no tax area may appear indispensable to understand why Irpef is not due within certain incomes.
This is a part of income from work or pension which is not subject to Irpef because it is canceled out by the deductions due for employment, self-employment or pension income.
The no tax area has changed on several occasions over the last decade, just think that until 2015 the income threshold on which Irpef was not due for pensioners was lower than that provided for employees.
With the 2016 Stability Law, however, for pensioners over 75 the no tax area is equated to that of employees (at 7,750 euros per year) while for those under 75 it remains set at 7,500 euros.
A new agreement between the Government and the social partners also extends the equality to pensioners under 75: since 2017 pensioners and employees can count on the same exemption threshold until 2022.
From 2022, however, the income threshold required to avoid paying taxes on pension income exceeds that expected for employed workers.
This is the no tax area that is currently in force.
Why is there a no tax area? The no tax area is regulated for the first time by article 2 of Law 289 of 2002.
The no tax area was introduced to exclude the application of taxation for those with incomes that can be placed below the subsistence threshold.
Precisely in this first form there was no mathematical formula for calculation, but it worked as a deduction from overall taxable income up to a certain threshold.
Only with the passage of time was the no tax area remodeled thanks to the introduction of deductions for employed, self-employed and pension work, ensuring that they decreased as income increased.
Within certain income thresholds, therefore, today the deductions provided for the type of income can eliminate the tax due.
But be careful, when the tax is zero due to deductions, it is completely excluded that the taxpayer will be entitled to a tax refund, given that they have not been paid.
Precisely for this reason, those who fall within the no tax area are defined as "incompetent", i.e.
without fiscal capacity (they are therefore not entitled to have refunds on the Irpef paid, given that they do not pay it and in fact do not benefit from the deductions on expenses incurred).
read also What is fiscal capacity? Calculation and what it is for No tax area 2023 From 2022 to today the income threshold within which taxes are not due is equal to: 8,500 euros for pension income; 8,174 euros for income from employment; 5,500 euros for income from business or self-employment.
Why are there different income thresholds for the no tax area? This happens due to the fact that the deductions on the type of income received are different.
It is precisely the deductions on the income received (employee, self-employed and pension) that determine the threshold of the no tax area.
Let's try to understand, therefore, how work and pension deductions work and how they determine the no tax area.
Deductions, how do they affect the no tax area? As we anticipated in the previous paragraph, the deductions provided for: income from employment; retirement income; income from self-employment.
It should be considered, in fact, that for incomes up to 15,000 euros there is a deduction from employment of 1,880 euros.
If you take the no tax area of employees (8,174) and calculate the tax to be paid on it, you get 1,880 euros as a result.
In fact, up to 8,174 euros of income, the employee deductions due to the taxpayer eliminate the tax due.
The same applies to pension income (for which higher deductions equal to 1,955 euros are foreseen and, in fact, the no tax area threshold is higher, and for self-employment for which lower deductions are due and, in fact, the income threshold for not paying taxes is lower).
When will the no tax area rise? As is clear, therefore, the income threshold within which you do not have to pay taxes depends on the deductions due.
Usually when we talk about no tax area only deductions from employed, self-employed and pension work are taken into consideration, but a worker may have dependent family members or be entitled to deductions for expenses incurred.
In these cases, without prejudice to the no tax area rules that we have explained so far, taxes may not be due even on higher income limits.
read also Deductions 730/2023: the complete list of expenses that can be downloaded How will the no tax area change in 2024? With the revision of the Irpef rates foreseen by the tax reform and implemented in the 2024 Budget Law, there is not only the merging of the first two rates and related brackets, but also an equalization of the deductions due for pension income and income from work employee.
The deductions for employed work will be raised to 1,955 euros and, consequently, the no tax area for employed workers will also rise to 8,500, an income limit which is currently only foreseen for pensioners.

Author: Hermes A.I.

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