Budget maneuver 2025: news on the tax wedge, Irpef, restructuring bonuses, dependent children

Analysis of the key measures envisaged by the next budget law in force from 1 January

Tax wedge cut

The tax wedge measures the difference between the cost of labor borne by the employer and the net salary received by the worker. This wedge is made up of two main elements: on the one hand the personal income tax and on the other the social security contributions. The employee is responsible for the tax and part of the social security contributions, while the employer takes care of the remaining share of social security contributions.

The structural transformation of the cut to the tax wedge for employees affects social security contributions and has the aim of reducing the gap between the cost of labor for employers and the net amount received by workers. Currently, the tax wedge in Italy is one of the highest among OECD countries, reaching 45.9%.

As regards cutting the wedge, the intervention could follow a double approach: starting from next year, the cut would remain contributory for incomes up to 20,000 euros, and then transform into fiscal, through an increase in deductions for employed work up to 35,000 euros. Subsequently, a rather rapid progressive decrease will begin up to 40,000 euros.

Irpef with three rates

The tax on personal income, known as Irpef, following the Tax Reform, has undergone changes for the year 2024 alone, which, subject to available resources, should become structural with the next Budget Law.

Irpef is regulated from article 11 of Presidential Decree no. 917/1986, which dictates the rules for calculating the tax due, and Legislative Decree no. 216/2023 provides that starting from 1 January and until 31 December 2024 the Irpef rates and brackets are structured as follows (Previous article

• 23% rate for incomes up to 28,000 euros,
• 35% rate for incomes above 28,000 euros and up to 50,000 euros,
• rate of 43% for incomes exceeding 50,000 euros,

With regard to 2025, the desire to confirm the rules envisaged to date has been highlighted several times and the replication of the current structure is certain for now. Furthermore, the second rate (for incomes between 28,000 and 50,000 euros) could drop from 35 to 33% and it is hypothesized to act on the brackets, raising the second step up to 60,000 euros.

Renovation bonus

The 50% renovation bonus will be extended under the same conditions as in 2024, with a spending limit of 96 thousand euros. However, the extension is only foreseen for homes main ones, while for second homes it drops to 36%, with a spending ceiling of 48 thousand euros.

All those who start extraordinary maintenance, restoration, conservative rehabilitation and building renovation work on individual residential real estate units of any cadastral category, or ordinary maintenance work for the common areas of residential buildings can benefit.

Among the most frequent interventions that fall within the scope of the bonus:

• installation of elevators and safety stairs;
• construction and improvement of toilets;
• replacement of external fixtures and shutters with shutters;
• renovation or construction of stairs and ramps; from asbestos;
• works to avoid domestic accidents and eliminate architectural barriers;
• interventions aimed at wiring buildings;
• installation of gas detection devices.

Ceiling on tax deductions and dependent children

Those who earn between 75,000 and 100,000 euros will be able to deduct up to a maximum of 14 thousand euros, while for those who exceed 100,000 euros the limit drops to 8,000 euros.

The ceiling will be reduced by 50% in absence of dependent children, 30% if there is only one child and 15% if there are two children, while it will remain unchanged for those who have more than three children or children with disabilities.

Deductions can only be requested for children aged between 21 and 30 (up to the age of 21 they are included in the single allowance). These amounts exclude health expenses and those already in progress for mortgages and building renovations.