2027 Budget: work begins – consideration is being given to confirming the tax exemption for contract renewals and bonuses
Two billion were allocated in the last Budget Bill. Minister Calderone said: “Our aim is to reaffirm this commitment.”
Work has begun on the 2027 Budget. The Minister for Labour, Marina Calderone, outlined the initial priorities for employment in recent days, explaining at the presentation of the INPS’s 25th Annual Report: “Our commitment is to ensure the continuity of the provisions in the 2026 Budget Law that provide for preferential tax treatment for contract renewals, performance bonuses and allowances for arduous work: in the 2026 Budget Law, we have allocated two billion euros to these items, and our aim is to reaffirm this commitment in the 2027 Budget Law to ensure continuity, to enable the renewal of expiring contracts, and to improve pay conditions as well.”
Measures under consideration
“By incentivising – added Calderone – contract renewals with a 5 per cent tax rate, but above all by also promoting second-level collective bargaining, thereby enabling companies to establish a system of incentives and additional welfare benefits beyond the scope of standard contracts, whilst allowing a 1 per cent tax rate to be applied to amounts up to 5,000 euros – is yielding results. The number of contracts signed is rising, as is the threshold – that is, the average level of bonus paid to workers: it was around 1,400–1,500 euros last year; we are now at an average of 1,800 euros, and I believe this is the result of the support and tax relief policy that the government has put in place.”
Employment figures
According to the latest figures from the Ministry of Labour (as at 15 June), the average annual bonus paid to the more than 3.8 million workers covered by a productivity contract exceeds 1,800 euros. Specifically, there are 3,853,732 beneficiaries and the average annual value of the bonus is €1,812.36, €16.71 more than on the same day of the previous month and an increase of €207.12 compared with December 2025. On these sums – paid to private-sector employees on fixed-term or permanent contracts whose income from employment did not exceed 80,000 euros in the previous year – a tax rate of 1 per cent applies from January, up to a maximum of €5,000 gross, as a result of the tax relief and the increase in the upper limit provided for in the latest budget.
Tax relief on contract renewals
Also as part of the latest budget, tax relief on contract renewals was introduced. The legislation provides that, in order to encourage wage adjustments in line with the cost of living and to strengthen the link between productivity and wages, a substitute tax equivalent to 5 per cent of IRPEF and regional and municipal surcharges shall be levied on pay rises paid to private-sector employees in 2026, in implementation of collective agreements signed between 1 January 2024 and 31 December 2026. The measure applies to private-sector workers whose income from employment – in the year 2025 – does not exceed 33,000 euros. According to the technical report on the 2026 budget, there are approximately 3.8 million workers are potential beneficiaries of the 5 per cent substitute tax on pay rises paid to private-sector employees in 2026, in implementation of the collective agreements signed between 1 January 2024 and 31 December 2026.
