The 2026-2028 Budget Law is an intervention of roughly EUR 22 billion which, according to the Ministry of Economy and Finance, does not increase the deficit. For families and businesses the most significant changes concern income tax, employment and deductions.
IRPEF: the 28-50k band reduced
The most debated measure is the reduction of the IRPEF rate for the band between EUR 28,000 and 50,000 of income, which falls from 35% to 33%. The measure does not apply to income above EUR 200,000.
Formally this is a rate reduction, not a widening of taxable bases: the legislature's choice to maintain the closed list of deductions rather than a structural reform of the system produces a mildly regressive effect on average income, attenuating the real benefit for lower and middle brackets.
Employment and the tax wedge
On employment the law provides a 5% incentive regime on wage increases relating to increases from 2024 for income up to EUR 33,000, and raises the threshold for the 15% substitute tax on self-employed income to EUR 35,000.
On pensions, the increase in the standard retirement age has been modified to one month in 2027 and two months in 2028; pensions in disadvantaged conditions receive a EUR 20 monthly increase. From 1 July 2026 automatic supplementary pension enrolment begins, with a 60-day opt-out window from hiring.
Families and deductions
On the family side, the exclusion of the primary residence from the ISEE calculation rises from EUR 52,500 to EUR 91,500, with a EUR 120,000 ceiling for households in metropolitan cities. The bonus for children rises from EUR 40 to EUR 60 per month for workers with at least two children and income up to EUR 40,000.
The law also provides a contribution of up to EUR 1,500 for certain non-state schools (scuole paritarie) for families with ISEE up to EUR 30,000, and the 'Carta dedicata a te' with a EUR 500 contribution for families with ISEE not exceeding EUR 15,000.
Business and investment
For businesses the law provides three-year hyper-amortisation for investments made between 1 January 2026 and 30 September 2028, with a related fund of EUR 1.3 billion, and raises the meal-voucher exemption threshold from EUR 8 to EUR 10.
On the tax side, banks' IRAP increases by two percentage points for three years, with a EUR 90,000 threshold in 2027 and 2028, and the deductibility of interest expense is capped at 96% for 2026, with a progressive rise in the following years.
Practical implications
For practitioners in tax and employment law the law has an immediate effect on calculations and requires attention on three fronts: the exclusion for high incomes, which must be verified case by case; the supplementary-pension opt-out window, which has a fixed and non-deferrable deadline; and the limitation periods and instalment plans for tax debts, which for amounts assigned to the collection agency up to 31 December 2023 extend to 9 years, in 54 equal two-monthly instalments.
None of these measures is automatic: each requires a deliberate choice and the relevant documentation.
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