2026 Salaries: IRPEF, Taxes & Payslip Changes

The Budget Law intervenes with numerous regulations on salaries, determining various increases for medium-low ones, with the aim of increasing purchasing power eroded by inflation and encouraging increases linked to bargaining and productivity improvements. In essence, lThe average impact is not expansive, but defensive. We are therefore talking about a few tens of euros more per month, in the best case scenario. A prudent response to the requests of unions and businesses to lighten the cost of labor without compromising the balance of public finances.

Up to 440 euros more with the IRPEF cut

First of all it intervenes on the Irpef by reducing from 35 to 33% the withdrawal rate on the second bracket of taxable income, the one between 28 thousand and 50 thousand euros gross. The overall discount for the middle class is worth almost 3 billion euros and will be distributed across more than 13 million taxpayers. Paychecks will see a net increase, variable based on income. For a net salary of 2 thousand euros for 13 months the increase will be 15-16 euros per month, approximately 200 euros more per year.

The Irpef discount

The discount on Irpef will fluctuate from a minimum of just 20 euros per year for those with a gross taxable income of 29 thousand eurosranging from around 140 euros more with 35 thousand euros of income, up to a maximum of 440 euros, around 33 euros more per month (considering the thirteenth salary), for those with a taxable income of at least 50 thousand euros. This maximum benefit will be enjoyed by all those with a gross income of up to 200 thousand euros. Beyond this threshold, however, a cut in tax deductions of 440 euros will be triggered, such as to eliminate the Irpef cut (unless the deductions are equal to zero or in any case lower than the Irpef discount). For higher incomes – over 200 thousand euros – the effect is partly offset by a reduction in deductions.

Contractual increases, rate of 5%

There is also a 5% preferential tax rate on salary increases deriving from the renewals of collective labor agreements. The novelty concerns the salary increases paid, in 2026, to private sector employees with a total income from employment not exceeding 33 thousand euros gross in 2025 (initially the ceiling was set at 28 thousand euros gross, but was raised with an amendment). The measure concerns private sector workers with an income not exceeding 33 thousand euros and an audience estimated at approximately 3.8 million people.

The discounted rate

The rule states that, when the salary increases take place in implementation of the renewals of the collective labor agreements signed in the years 2024, 2025 and 2026ordinary Irpef taxation does not apply, but a flat-rate substitute rate of 5%. On a gross salary of 32 thousand euros, an increase of 100 euros gross per month would lead to an increase in the net paycheck of 95 euros, compared to around 65 for ordinary taxation, with a gain of around 30 euros per month. The government’s technical report estimates that the target audience for this benefit is around 3.8 million private sector workers. The measure will cost less revenue of 643 million.

Performance bonuses taxed at 1%

The government, with the Budget Law, has also changed the tax treatment of performance bonuses and those deriving from profit sharing by employees. Objective: to encourage integrative bargaining, so far mostly limited to large companies, to better link salary dynamics to productivity trends and company results. For many years, the rules had already provided for a preferential rate of 10%, later reduced to 5%, for private sector workers with certain incomes. The levy in force in 2025 is 5% and applies to both performance bonuses negotiated in the company and on sums deriving from company profit sharing agreements.

Prizes not exceeding 3 thousand euros

The benefit applies to employees with income from work not exceeding 80 thousand euros gross and on premium amounts not exceeding 3 thousand euros per year. The maneuver further reduces the rate to 1% for 2026 and 2027 and increases the ceiling within which it applies to 5 thousand euros. THEassuming a performance bonus of 1,500 euros gross, the net will be 1,485 euros, with a withdrawal of just 15 euros (1% in fact) against 1,425 euros expected now, with a one-off gain of 60 euros. The technical report estimates that 250 thousand workers will be affected, for a lower revenue of 171 million. The measure also extends for 2026 the tax exemption of 50% of dividends deriving from shares attributed to workers in place of performance bonuses.

Tax discounts on shifts

Next year, taxes will also be reduced on salary items relating to increases and allowances for night work, holiday work, work on weekly rest days and allowances and other emoluments relating to shift work. These items, up to a maximum of 1,500 euros per year, will be subject to preferential taxation. In fact, the maneuver introduces for 2026 a substitute tax for Irpef and the related regional and municipal surtaxes, equal to 15%. The recognition of this flat rate tax will be triggered, limited to private sector employees, provided that the gross income from work in 2025 did not exceed 40 thousand euros. The government’s technical report estimates that 2.3 million workers will be affected, for a lower revenue of 621 million euros.

Holiday and night surcharges

Tourism workers with an annual gross income of up to 40 thousand euros are excluded from this rule, for which it is confirmed until 30 September 2026. the current increase of 15% of gross pay for night shifts and holiday services which ends up in your paycheck tax-free. The maneuver also provides for an increase in the tax-free ceiling for electronic meal vouchers, which will go from 8 to 10 euros per daywhile the price for paper vouchers will remain at 4 euros. The estimated economic benefit for each worker who uses the voucher at most can reach around 440 euros per year.

Additional income, the flat tax remains

Some news, with the Budget law, also on the flat tax of 15% (and just 5% for the first five years) for employees and pensioners who also have income from self-employment with a VAT number. The maneuver extends throughout 2026 the ceiling of 35 thousand euros of income (from employment or pension) received in the previous year in order to access or remain in the flat-rate regime. Without this extension we would have returned to the ceiling of 30 thousand euros. The limit of 85 thousand euros per year of revenues or compensation, which must not be exceeded in order to benefit from the flat tax, also remains unchanged, despite various majority forces having pushed for an increase. The government’s technical report estimates that 12 thousand new members will join the subsidized regime, thanks to the extension of the income ceiling to 35 thousand euros. According to the tax returns presented in 2024, there are 194 thousand employees and pensioners with a flat-rate VAT number, of which 153 thousand are employees and 41 thousand pensioners. These numbers describe 40% growth over the last five years. And today employees and pensioners with the flat tax represent around 10% of all taxpayers who apply the flat rate regime.

​Families and public employment

On the family policy front, the bonus for working mothers with two children rises from 40 to 60 euros per monthfor incomes up to 40 thousand euros and up to the second child’s tenth birthday. News also for the public sector: additional compensation, within the limit of 800 euros and for incomes up to 50 thousand euros, will be subject to a substitute tax of 15%. An intervention that aims to make often fragmented emoluments clearer.