UPDATE: How will Italy's 2024 budget affect your finances?
The Italian government has this week published more details about the contents of its 2024 budget law, including higher healthcare charges and some unexpected tax increases.
The Italian government on Tuesday published the draft text of its budget plan for 2024, eight days after it was initially announced.
The 91-article, 106-page document (which Italian newspaper Corriere della Sera noted was “rather slim compared to tradition”), is to begin its passage through parliament later this week, but it has so far been shared with and published online by several Italian media outlets.
Some details were “still missing”, noted Corriere in its review of the draft on Wednesday, but the plan gave confirmation and more detail of the measures announced by cabinet ministers so far.
It also contained some new, unannounced features, including an increase to VAT on feminine hygiene products and baby formula, and a requirement for businesses to be insured against floods and earthquake damage.
While the draft didn’t give any further details, it also confirmed the plan to charge some international residents a minimum healthcare registration fee of 2,000 euros.
The budget law is not yet set in stone and it could, as in past years, undergo a long series of amendments before the approval process is complete.
But based on the draft text (which you can read in full here, in Italian, should you want to) here’s an overview of the incoming measures Italy’s international residents most need to be aware of.
Income tax reform
The 2024 budget will partially reform Italy's income tax system by cutting the number of income tax bands from four to three, in a move towards a 'flat tax' for all employees - a cornerstone of the government's 2022 election campaign.
Italy's current tax bands are:
- 23 percent for incomes up to 15,000 euros.
- 25 percent for incomes up to 28,000 euros.
- 35 percent for incomes up to 50,000 euros.
- 43 percent above 50,000 euros.
The draft text confirmed that, as expected, this budget will merge the bottom two bands, so that anyone with an income of up to 28,000 would pay the 23 percent rate.
The move is expected to result in individual savings of around 120 euros per month, the government said, however it seemed to be referring to higher earners in what is currently the third bracket: those who are in the second, 25 percent band will instead be paying three percent more.
The measure - which is expected to cost around 4.1 billion euros - is only financed for one year, news agency Ansa noted, meaning from 2025 further funds would need to be found to keep the reform in place.
Tax cuts
As announced, the draft confirmed cuts to the ‘tax wedge’ (cuneo fiscale), i.e. the difference between the amount workers are paid by their employer and the amount they take home after taxes, will continue next year.
The plan is to renew a reduction in salary tax contributions for those earning up to 35,000 euros a year, at a cost of around 10 billion euros.
"It's a paycheck increase which on average corresponds to around 100 euros per month for around 14 million citizens," Meloni said.
Healthcare charge
As for the budget proposal specifically affecting Italy's foreign residents: some may have to pay higher fees to use the Italian health service (servizio sanitario nazionale, or SSN), from next year.
The draft text confirmed the plan is to set the registration fee for those who need to pay at a minimum €2,000 euros a year - which could mean a big increase for many people, as annual fees currently begin at around 300 euros, and average 1,200 euros.
READ ALSO: What we know about Italy’s plan to charge non-EU residents €2,000 for healthcare
The economy and finance ministry said in a statement that the government intends to levy the fee on foreign nationals to help cover increased public spending in next year's budget on healthcare, tax cuts, and other measures.
'Tampon tax'
In the published draft it emerged that the government plans to reverse previous cuts to the so-called ‘tampon tax’ or VAT rate on feminine hygiene products, as well as on baby food and infant formula.
The plan stated that VAT will go back up to 10 percent on these and other items from July 2024, after it was cut to five percent last year.
Italy’s standard VAT (known as IVA) rate is 22 percent, with lower rates applied to certain essential goods.
Sugar and plastic taxes postponed
The 2024 budget plan delayed the introduction of so-called sugar and plastic taxes for a further six months, meaning they will now come in from July 2024 - unless postponed further.
Levies on sugary non-alcoholic drinks and on single-use plastic items were approved in the 2020 budget, but their implementation has been repeatedly pushed back amid opposition from industry groups.
Tourist tax
The draft contained a provision allowing - not requiring - local councils to hike any existing taxes on overnight stays by tourists by up to two euros a night during the 2025 Holy Year celebrations, which are expected to bring millions of tourists to Italy, and especially Rome.
Introduced in Italy at the start of the last decade, the tourist tax differs from city to city and according to accommodation type.
In Rome it currently ranges from a minimum of three euros per night to a maximum of 10 euro per night for up to 10 consecutive days.
Higher taxes on cigarettes
The draft also included plans to increase taxes on cigarettes by between 10 and 12 euro cents from next year, and confirmed a planned increase in tax on “heated tobacco products” (e-cigarettes) in 2024 and 2025.
Earthquake and flood insurance
The draft contained a new obligation for businesses to take out insurance against damage from natural disasters by 2024, from earthquakes to floods and volcanic eruptions.
The measure was included after the state spent over one hundred billion euros on damage caused by natural disasters in recent years, Corriere reported.
TV licence fee
Italy's mandatory licence fee or canone for households with at least one television will be reduced from 90 euros a year to 70 and will no longer be automatically included in electricity bills, as is currently the case.
Benefits for families
The government has pledged to tackle the problem of Italy's falling birth rate by increasing financial support for larger families.
In her press conference on Monday, Meloni said women employees with at least two children would no longer be required to pay their own social security contributions under the draft budget.
READ ALSO: What is Italy’s government doing about the falling birth rate?
"We want to establish that a woman who gives birth to at least two children has already made an important contribution to society, and therefore the state partly compensates them by paying their social security contributions," she said.
More details of the plan came in the draft text, which said the package will cover up to 3,000 euros a year in social security contributions for women employees with two children, with the youngest aged under 10, and those with three children or more, with the youngest aged up to 18.
Pensions
The budget includes an end to a current requirement that workers on a contributory pension scheme may retire at an age of their choosing (within a certain bracket) only if their pension benefit amounts to 1.5 times their 'social pension'.
"In our opinion, this is not a correct measure and we have removed it," Meloni said.
Two current pension schemes - the 'Opzione Donna' and the 'Ape Sociale' - will be abolished and replaced by a single fund.
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The Italian government on Tuesday published the draft text of its budget plan for 2024, eight days after it was initially announced.
The 91-article, 106-page document (which Italian newspaper Corriere della Sera noted was “rather slim compared to tradition”), is to begin its passage through parliament later this week, but it has so far been shared with and published online by several Italian media outlets.
Some details were “still missing”, noted Corriere in its review of the draft on Wednesday, but the plan gave confirmation and more detail of the measures announced by cabinet ministers so far.
It also contained some new, unannounced features, including an increase to VAT on feminine hygiene products and baby formula, and a requirement for businesses to be insured against floods and earthquake damage.
While the draft didn’t give any further details, it also confirmed the plan to charge some international residents a minimum healthcare registration fee of 2,000 euros.
The budget law is not yet set in stone and it could, as in past years, undergo a long series of amendments before the approval process is complete.
But based on the draft text (which you can read in full here, in Italian, should you want to) here’s an overview of the incoming measures Italy’s international residents most need to be aware of.
Income tax reform
The 2024 budget will partially reform Italy's income tax system by cutting the number of income tax bands from four to three, in a move towards a 'flat tax' for all employees - a cornerstone of the government's 2022 election campaign.
Italy's current tax bands are:
- 23 percent for incomes up to 15,000 euros.
- 25 percent for incomes up to 28,000 euros.
- 35 percent for incomes up to 50,000 euros.
- 43 percent above 50,000 euros.
The draft text confirmed that, as expected, this budget will merge the bottom two bands, so that anyone with an income of up to 28,000 would pay the 23 percent rate.
The move is expected to result in individual savings of around 120 euros per month, the government said, however it seemed to be referring to higher earners in what is currently the third bracket: those who are in the second, 25 percent band will instead be paying three percent more.
The measure - which is expected to cost around 4.1 billion euros - is only financed for one year, news agency Ansa noted, meaning from 2025 further funds would need to be found to keep the reform in place.
Tax cuts
As announced, the draft confirmed cuts to the ‘tax wedge’ (cuneo fiscale), i.e. the difference between the amount workers are paid by their employer and the amount they take home after taxes, will continue next year.
The plan is to renew a reduction in salary tax contributions for those earning up to 35,000 euros a year, at a cost of around 10 billion euros.
"It's a paycheck increase which on average corresponds to around 100 euros per month for around 14 million citizens," Meloni said.
Healthcare charge
As for the budget proposal specifically affecting Italy's foreign residents: some may have to pay higher fees to use the Italian health service (servizio sanitario nazionale, or SSN), from next year.
The draft text confirmed the plan is to set the registration fee for those who need to pay at a minimum €2,000 euros a year - which could mean a big increase for many people, as annual fees currently begin at around 300 euros, and average 1,200 euros.
READ ALSO: What we know about Italy’s plan to charge non-EU residents €2,000 for healthcare
The economy and finance ministry said in a statement that the government intends to levy the fee on foreign nationals to help cover increased public spending in next year's budget on healthcare, tax cuts, and other measures.
'Tampon tax'
In the published draft it emerged that the government plans to reverse previous cuts to the so-called ‘tampon tax’ or VAT rate on feminine hygiene products, as well as on baby food and infant formula.
The plan stated that VAT will go back up to 10 percent on these and other items from July 2024, after it was cut to five percent last year.
Italy’s standard VAT (known as IVA) rate is 22 percent, with lower rates applied to certain essential goods.
Sugar and plastic taxes postponed
The 2024 budget plan delayed the introduction of so-called sugar and plastic taxes for a further six months, meaning they will now come in from July 2024 - unless postponed further.
Levies on sugary non-alcoholic drinks and on single-use plastic items were approved in the 2020 budget, but their implementation has been repeatedly pushed back amid opposition from industry groups.
Tourist tax
The draft contained a provision allowing - not requiring - local councils to hike any existing taxes on overnight stays by tourists by up to two euros a night during the 2025 Holy Year celebrations, which are expected to bring millions of tourists to Italy, and especially Rome.
Introduced in Italy at the start of the last decade, the tourist tax differs from city to city and according to accommodation type.
In Rome it currently ranges from a minimum of three euros per night to a maximum of 10 euro per night for up to 10 consecutive days.
Higher taxes on cigarettes
The draft also included plans to increase taxes on cigarettes by between 10 and 12 euro cents from next year, and confirmed a planned increase in tax on “heated tobacco products” (e-cigarettes) in 2024 and 2025.
Earthquake and flood insurance
The draft contained a new obligation for businesses to take out insurance against damage from natural disasters by 2024, from earthquakes to floods and volcanic eruptions.
The measure was included after the state spent over one hundred billion euros on damage caused by natural disasters in recent years, Corriere reported.
TV licence fee
Italy's mandatory licence fee or canone for households with at least one television will be reduced from 90 euros a year to 70 and will no longer be automatically included in electricity bills, as is currently the case.
Benefits for families
The government has pledged to tackle the problem of Italy's falling birth rate by increasing financial support for larger families.
In her press conference on Monday, Meloni said women employees with at least two children would no longer be required to pay their own social security contributions under the draft budget.
READ ALSO: What is Italy’s government doing about the falling birth rate?
"We want to establish that a woman who gives birth to at least two children has already made an important contribution to society, and therefore the state partly compensates them by paying their social security contributions," she said.
More details of the plan came in the draft text, which said the package will cover up to 3,000 euros a year in social security contributions for women employees with two children, with the youngest aged under 10, and those with three children or more, with the youngest aged up to 18.
Pensions
The budget includes an end to a current requirement that workers on a contributory pension scheme may retire at an age of their choosing (within a certain bracket) only if their pension benefit amounts to 1.5 times their 'social pension'.
"In our opinion, this is not a correct measure and we have removed it," Meloni said.
Two current pension schemes - the 'Opzione Donna' and the 'Ape Sociale' - will be abolished and replaced by a single fund.
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