Italy Budget 2026-2027: Proposed IRPEF Tax Cuts for Middle Class

The Italian government is developing its 2026 and 2027 budget plans, with a primary focus on providing tax relief to the middle class and incentives for young workers. A central proposal involves extending the 33% IRPEF tax bracket. While the original plan aimed to cover incomes up to 60,000 euros, costing an estimated 2.7 billion euros, a compromise proposed by Vice Premier Antonio Tajani suggests a two-phase approach.

Under this plan, the 33% bracket would be extended to 55,000 euros in 2027, reducing the cost to approximately 1.3 billion euros, before potentially expanding to 60,000 euros in 2028. This adjustment aims to balance fiscal responsibility with the goal of supporting middle-income earners.

Other measures under consideration for the budget include tax breaks for workers under 30 to encourage employment, potential tax reductions on the thirteenth-month salary, and a 5% flat tax on long-term rentals. The government is also navigating strict EU fiscal rules, limiting the available funds for these initiatives.