The Italian government is finalizing its 2025 budget, with a major focus on income tax (Irpef) cuts for the middle class. The proposed changes, estimated to cost around 4 billion euros, are a key point of agreement between the Brothers of Italy, Forza Italia, and Lega parties. Discussions are ongoing regarding the allocation of resources for various financial measures [[2]].

other potential measures under consideration include a tax amnesty for smaller debts and a postponement of the increase in retirement age, which is currently scheduled for 2027 under the Fornero law.However, these measures are contingent on the availability of resources as determined by the update note of the Economics and Finance Document (Def) [[2]].

Income Tax (Irpef) Reduction for Middle-Income Earners

The government intends to reduce the tax burden on employees, building upon previous interventions that primarily benefited lower-income earners. The focus for 2026 is shifting towards the middle class,specifically those with gross annual salaries ranging from 30,000 to 50,000 euros [[2]].

the proposed Irpef changes include:

• Extending the income bracket to a maximum threshold of 60,000 euros.
• reducing the Irpef rate for this bracket from 35% to 33%.

These adjustments are projected to increase the purchasing power of affected employees,with estimated tax savings ranging from 257 to 627 euros per year per person. The total cost of this Irpef cut is estimated at approximately 4 billion euros [[2]].

The most crucial measure of the Budget Law is the Irpef cutting for the average class,costing around 4 billion euros.

Tax amnesty and Pension Adjustments

While the Irpef cut enjoys broad support, other measures are also being considered. The League party is advocating for preventing the scheduled 3-month increase in the retirement age set for 2027. While the immediate cost of this measure is low, it could amount to 3 billion euros by the end of the legislature. Additionally, the League is pushing for a new tax amnesty program targeting individuals with small debts to the tax authorities [[2]].

Resource Availability

The feasibility of these measures hinges on the resources available, which will be determined by the estimates in the upcoming update note to the Economics and Finance Document. This document will project Italy’s economic growth and the resulting deficit the government can accommodate. Though, potential American duties could negatively impact the Italian economy, possibly reducing the funds available for these initiatives [[2]].