Global Daily Tax News, Italian 2026 Budget Before Parliament, (Oct 29, 2025)

Italy's 2026 Budget Law was recently approved by the nation's cabinet and is before parliament for approval.

For individuals, the Budget provides that the second-lowest personal income tax rate will fall from 35 percent to 33 percent, for income between EUR28,000 and EUR50,000. The reduction will be unavailable for those with incomes exceeding EUR200,000.

Further, the 2026 Budget confirms the application of a 15-percent flat tax on employment or pension income up to EUR35,000.

For companies, the Budget announces that companies purchasing new capital goods will benefit from an additional deduction, of 180 percent of investments up to EUR2.5m; 100 percent of investments between EUR2.5m and EUR10m; and 50 percent of investments between EUR10m and EUR20m.

For green investments, the deduction will be 220 percent of investments between EUR2.5m and EUR10m. The deduction rate will be 140 percent for investments between EUR2.5m and EUR10m, and 90 percent for investments therefrom up to EUR20m.

The Budget further announces that: tax privileges for businesses locating in special economic zones will be extended by three years; the tax-free threshold for electronic meal vouchers for employees will be increased to EUR10, from EUR8; and the exemption from the plastics and sugar tax will be extended to December 31, 2026.

The Budget features a series of changes that would affect banks and insurance companies, including a two percentage point increase to the corporate income tax rate. The measures are contentious among political parties however, including also plans to extend restrictions on deductions against deferred tax assets.

Finally, the Budget announces a new opportunity for taxpayers to settle debts owing as of December 31, 2023, over up to nine years, in up to 54 equal bimonthly instalments.