Budget includes massive tax breaks for those who hire young people and mothers
Under discussion is an increase to 140–150 per cent in the super-deduction for the recruitment of under-35s into companies, rising to 180 per cent in the case of mothers, alongside a flat tax or a 50 per cent tax relief on the income of these new employees
Key points
Even with the limited resources available, the budget aims to take a further step along the path of the tax incentives introduced in recent years to boost youth employment. The proposal being worked on by officials at the Ministry of the Economy takes a two-pronged approach, focusing on both businesses and future workers.
The increased discount
To encourage companies to take on new staff, a proposal is on the table to increase the ‘maxideduzione’ (large-scale tax relief) that has been in force since 2024, when it was introduced under the slogan ‘The more you hire, the less you pay’. The aim is to raise the discount rates, which currently stand at 120 per cent or 130 per cent for certain protected categories, with preferential treatment for young people, who are one of the key drivers for maintaining broad employment prospects whilst a stagnant demographic is narrowing the population base. Under this approach, the discount rate could reach as high as 140–150 per cent for the recruitment of new employees below a certain age threshold, which could be set at 35 years. And it would rise even further, to as much as 180 per cent, when the contract is signed by young mothers, forming an ideal bridge between employment and family policies.
Boosting employment
Once again, therefore, the aim is to strengthen the stable employment base by increasing the costs that can be deducted from the taxable amount on which tax is subsequently calculated. From a practical point of view, this would be an additional option on top of an existing and operational incentive; it would therefore have the advantage of not requiring a long wait for implementation, thus allowing the stimulus to be activated as early as the start of 2027.
Lower income tax for the under-30s
At the same time, however, as mentioned, a tax relief scheme is being considered for young people employed in this way. The aim is to reduce the tax burden at the time of recruitment. In this case, the technical options range from the possibility of applying a sort of 5 per cent flat tax, replacing the first IRPEF rate of 23 per cent which applies to taxable income up to 28,000 euros. The alternative involves a tax relief scheme, which would reduce the taxable income by up to 50 per cent whilst leaving the tax rate structure unchanged.
In practice, this would be a scheme along the lines of the incentives introduced to encourage the return of highly skilled professionals or workers from abroad. This is not the only variable yet to be defined, as it will also be necessary to establish the age limit for the tax relief; one possibility is that, for cost-containment reasons, this could be set at 30 rather than 35. However, as with the other measures, the calculations regarding the target audience and coverage will only be finalised around the time of the Council of Ministers meeting, with the timetable still dependent on the European Commission’s response regarding flexibility.
