Italy faces fiscal deadline to secure tax cuts and budget stability

Italy faces a critical fiscal deadline on September 20, 2026, when the Ministry of Economy must submit its annual revision of the Medium-Term Structural Budget Plan to the European Union. This document will determine public spending for the 2025–2029 period and decide whether current tax incentives will be extended.

To maintain current tax reductions, including the reduction of the social security wedge and a three-bracket income tax system, the government requires over 15 billion euros annually. Specifically, 10.7 billion euros are needed for payroll tax cuts, while 4.3 billion euros are required to freeze the first Irpef tax bracket at 23%.

Failure to secure these funds within the constraints of the new European Stability Pact could result in the automatic expiration of several fiscal incentives by January 1, 2027, potentially reducing monthly take-home pay for some citizens by up to 110 euros. One proposed solution to cover the deficit involves implementing a 1.3% additional tax on assets exceeding 20 million euros, which could generate approximately 10 billion euros in revenue.