Tax Reform 2025: What Changes to Expect in Your Payslip?

The Evolution of Tax Reforms in Italy

As the fiscal reform progresses swiftly, it’s important to consider that some measures are only temporary.
The three tax brackets and rates for personal income tax (IRPEF), introduced on January 1, 2024, are set to expire on December 31, 2024, potentially reverting back to the four brackets of the previous year.

What to Expect for the Next Year?

Similarly, the decontribution, known as a cut in the tax wedge for employees, from 6% to 7%, is an annual measure that requires refinancing.
What changes can we anticipate in Italians’ paychecks for the upcoming year?

According to Government projections for 2024, there will be a reduction in IRPEF, consolidating the four brackets into the current three.
However, without funding allocated in the 2025 Budget Law, starting from January 1, we’ll revert back to the four IRPEF brackets of 2023.
This step back could lead individuals with incomes between 15,000 and 50,000 euros to pay more IRPEF, potentially increasing by up to 260 euros annually.

The 2025 Payslip Scenario

Final decisions will only be made during the drafting of the next Budget Law, and the leaked speculations suggest a provisional renewal awaiting new funding for 2026.
Minister of Economy, Giancarlo Giorgetti, has reiterated the intention to replicate the cut in the tax wedge next year for employees with incomes up to 35,000 euros.

Securing funds for these measures, especially confirming the three-tier IRPEF system, remains uncertain.
An additional 4.3 billion euros is required to maintain the IRPEF cut.
The Government aimed to source the missing resources from the biennial pre-agreed settlement, but the number of compliant taxpayers falls short of expectations.

Will There be a Tax Cut for Average Incomes?

Plans were announced earlier in the year to also address IRPEF for median incomes, which did not benefit from this year’s reduction.
Individuals with incomes above 50,000 euros might see a further reduction in the tax burden, although the availability of resources to support this is yet to be determined.

Details on a potential adjustment in IRPEF for median incomes will become clearer with the initial drafts of the Budget Law, reflecting the Government’s priorities based on the available funding.