Italy to cut income tax for lower earners

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Italy to cut income tax for lower earners
Italy's finance minister Daniele Franco has reached an agreement with the government’s majority parties to cut income tax for lower earners. Andreas SOLARO / AFP

Italy will drop its income tax bands from five to four and reduce tax rates for those on lower incomes under an agreement reached by key figures in the Italian government on Thursday.


Going forward, personal earnings of between 28,000 and 50,000 euros will be taxed at 35 percent in Italy, down from the current rate of 38 percent.

Taxes on earnings between 15,000 and 28,0000 euros will be reduced from 27 percent to 25 percent.

The 41 percent tax band for earnings between 55,000 and 75,000 euros will be abolished altogether, with all income over 50,000 euros now set to be taxed at the top rate of 43 percent.

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Yearly incomes below 15,000 euros will continue to be taxed at 23 percent.

The agreement was reached as the result of negotiations between Italy’s Economy Minister Daniele Franco and representatives of the majority parties in the Italian government over how to distribute the 8 billion euro tax cut provided for in Italy’s 2022 Budget Law.


Under the terms of the agreement, approximately 7 billion euros will go towards overhauling Italy’s personal income tax, or ‘IRPEF’, though these reforms.

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The remaining one billion will be used to eliminate the regional production ‘IRAP’ tax on sole proprietors and the self-employed.

The so-called ‘Bonus Renzi’, introduced by former Italian prime minister Matteo Renzi in 2014, which initially awarded an 80 euro and later a 100 euro tax bonus to lower earners, will be scrapped altogether.

Tax experts estimate that the reforms are likely to translate to average yearly savings of 100 euros for those on a 20,000 euro annual salary; 300 euros for those earning 30,000 euros per year, and around 600 for those receiving 40,000 euros per year, according to the Italian news daily Corriere della Sera.


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