Italy's government has now made its budget plan for next year into law, laying out upcoming tax and pension reforms as well as clarifying some extensions to tax breaks for home renovations.
The 2022 Budget Law, the first presented by the Draghi government, was approved on Thursday, just one day before the end-of-year deadline, following approval from the Senate last week.
The package of measures targets funds at managing the continuing Covid-19 health emergency, while billions have been assigned to help tackle high household bills and authorities also earmarked relief for areas hit by last summer's wildfire damage.
Here’s a look at the confirmed measures most likely to affect you.
Income tax
As previously agreed, Italy has formally approved a drop to its income tax bands from five to four and reduce tax rates for those on lower incomes.
Italy’s personal income tax, or 'IRPEF', on earnings between up to €15,000 will remain at 23 percent, while for salaries of between €15,000 and €28,0000, taxes will be reduced from 27 percent to 25 percent.
For salaries between €28,0000 and €50,000, the applicable tax rate will be 35 percent.
The 41 percent tax band for earnings between €55,000 and €75,000 will be abolished altogether, with all income over €50,000 now set to be taxed at the top rate of 43 percent.
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 (up to €15,000), will remain despite previous plans to scrap it.
Additionally, for employees with low incomes up to €35,000 per year (or up to €2,692 gross per month) the government will offer a 0.8 percent discount on social security contributions ('INPS') for the pay periods from January 1st to December 31st 2022.
Further funds have been set aside to eliminate the regional production 'IRAP' tax on sole proprietors and the self-employed. This will affect some 835,000 self-employed and professionals with a VAT registration number and will have an estimated cost of just over €1 billion in 2022 and €1.2 billion from 2023.
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Additional taxes
The regional and municipal additional taxes on personal income tax ('Irpef') will be postponed to March. The deadline was previously set for December 31st 2021 and this change will allow regional and autonomous provincial legislation to be brought into line with the changes to personal income tax as set out in the Budget Law.
Pensions
Following the government's plans to expand who can access pensions, the approved Budget has widened the range of people to include women and those in certain types of tough manual jobs who benefit from early pensions, the so-called ‘APE sociale (Anticipo Pensionistico)‘.
It was originally an experimental measure introduced in May 2017 and has been rolled on since then.
This category of workers will be able to retire early through the APE Sociale, with the threshold of contributions dropping from 36 to 32 years. The age requirement to access pensions remains 63.
More jobs have been added to the list too, including primary and pre-primary school teachers, warehouse workers, qualified professions in health and social services and some plant and machinery operators.
Authorities also approved the so-called 'Quota 102', which will replace the previous 'Quota 100'. This means an early retirement pension for individuals who, during the course of 2022, reach the requirements of 64 years of age and 38 years of contribution years.
Household energy bills
A cut to the cost of electricity and gas bills is coming in 2022 - parliament approved an amendment to the budget that doubles the resources earmarked for reducing energy prices.
€1.8 billion will be made available to contain the effects of price hikes in the electricity and natural gas sectors. The additional funds will be added to the €2 billion previously earmarked for in the budget package, bringing the total budget for this area to €3.8 billion.
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Families in difficulty can also be pay their household bills in 10 instalments.
The law aims to "contain, for the first quarter of 2022, the effects on households and businesses resulting from gas price increases that have reached unprecedented levels and led to significant increases in electricity prices'', the technical report reads.
Building superbonus
After much speculation as to how this building bonus would continue into 2022, the superbonus on single-family homes has been approved for the whole of 2022.
The previous caveat has been scrapped. Now there's no reference to only being eligible if it’s your first home and if you have an ISEE (the social-economic indicator of household wealth) of €25,000 maximum.
Now, the only requirement is that 30 percent of works must be completed by June 30th 2022.
Italy’s government launched the ‘superbonus 110‘ in May 2020, one of a raft of measures aimed at boosting the Covid-hit economy. Offering homeowners large tax deductions on expenses related to energy upgrades and reducing seismic risk, the scheme has been so popular that high demand has led to delays on many projects.
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Condominiums, owners of buildings consisting of two to four units and third sector organisations will be able to take advantage of the benefit until 2025, with a sliding scale: 110 percent remains valid until 31 December 2023, dropping to 70 percent in 2024 and 65 percent in 2025.
Other building and home bonuses
More of Italy’s numerous tax ‘bonuses’ have also been extended and, in some cases, increased. Authorities have given the green light to raise the ceiling of deductible expenses for the furniture bonus, for example, from €5,000 to €10,000.
This bonus permits a 50 percent deduction on purchases of furniture and large household appliances such as ovens (not lower than class A), washing machines, washer-dryers and dishwashers not lower than class E and refrigerators and freezers not lower than class F.
The TV and decoder bonus has also been re-financed with an additional €68 million euros for 2022. The measure is intended to help with the costs of replacing older sets when Italy switches its signal to DVB-T2 in June 2022.
The contribution will be used to finance ''the purchase of TV sets suitable for the transmission standards in force and decoders'', reads the technical report. Those over 70 with an annual pension of under €20,000 will also be entitled to home delivery of a TV and decoder.
Also confirmed until 2024 are the renovation bonus, ecobonus, sismabonus, the water bonus and the facade bonus - but this one will only be rolled on into 2022 at 60 percent and no longer at 90 percent.
Single universal child benefit
From January 1st, families can submit applications for the single universal child benefit, available from March 1st 2022.
The single allowance is applicable to all categories of employees both public and private, self-employed, pensioners and the unemployed.
Almost all baby bonuses will disappear from March, with the exception of the nursery bonus.
Help to buy a first house for those under 36
Tax incentives for purchasing a first home for people under 36 years of age, known as the first home bonus (Bonus prima casa), have been extended through 2022.
The scheme aims to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, and help young homebuyers secure a mortgage.
For more details on the scheme and how to access it, see here.
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