Budget: tax relief on pay rises for young workers is on the way

It was not the ‘no tax’ zone for under-25s, nor the flat tax for under-35s. At the heart of the youth package presented yesterday by Prime Minister Giorgia Meloni, following the Cabinet’s approval of the budget, is a bonus for young workers. This is not a cash payment, but a reduced tax rate on income increases in 2027, whether these take the form of pay rises or career progression: it is ‘a 1 per cent substitute tax on increases in the employment income of young workers’, subject to income and amount limits. A limit which, as the Prime Minister herself stated, has been set at 2,500 euros, to be received in twelve monthly instalments or as a lump sum. The scheme is aimed at those under 30, as announced in recent days by the Minister for the Economy, Giancarlo Giorgetti.

The stated aim is to keep young people in Italy. “We want a young person starting out in the workforce in Italia to feel that this country wants to support them,” explained Meloni, adding that the government intends to prevent young people from feeling they have to ‘pack their bags’ to build a future for themselves.

A phenomenon that the figures have been tracking for years. According to the CNEL, between 2011 and 2024, 630,000 young people aged between 18 and 34 emigrated, 78,000 in 2024 alone, representing an estimated loss of human capital of around 160 billion euros. In 2025, however, according to Istat, the number of Italian citizens leaving the country fell to 109,000, down from 141,000 the previous year.

Then there is the youth unrest that has returned to the streets in recent weeks, as highlighted by the Prime Minister herself. The measures in the budget, she said, are not aimed at those who ‘believe they have to vandalise a shop in order to protest’, but to those who organise student assemblies, to those who ‘are right to say that rents are too high’ and to those who believe that Italian wages are not on a par with those in other countries. ‘It is not true that the institutions are not there for these young people,’ she added, referring to the housing plan, designed primarily for young people and young couples, and the measures concerning student accommodation.

The incentive forms part of a wider package. For rents under a negotiated agreement, the flat-rate tax rate falls to 5 per cent, dropping to 1 per cent when the tenant is aged 35 or under (see the article on page 11), whilst the Deputy Minister forEconomy, Maurizio Leo, has confirmed the continuation of tax relief for the renovation of a primary residence, a €5,000 furniture bonus and the strengthening of the ‘the more you hire, the less you pay’ scheme, increased to 140 per cent for the recruitment of young people and to 180 per cent for working mothers.