Manoeuvre 2026: 10% flat rate for salary increases and fringe benefits to support employees
In the Budget Bill, it is planned to introduce an Irpef rate reduced to 10 per cent on salary increases paid to private sector employees by renewals of national collective labour agreements as of 2026
Key points
An Irpef rate reduced to 10% on salary increases paid to private sector employees by renewals of national collective labour agreements to support the adjustment of salaries to the cost of living.
One of the latest innovations of the Budget Law, which is in the process of being finalised, is the application on contractual increases resulting from renewals, of a 10% flat rate as of 1 January 2026 and until 31 December 2028, limited to private sector employees only, for the entire contract term.
The options on the table
The article is still being finalised, and the government technicians are assessing its economic compatibility and application methods; they are considering aspects such as whether or not to include an income ceiling, and whether to extend the scope of application of the 10% flat-rate tax to renewals prior to 1 January 2026
The proposal sometimes advocated in past budget laws - strongly requested by the social partners - has so far been punctually rejected by the State General Accounting Office due to coverage problems. This measure may see the light of day, because coverage has been found after the Minister of Labour, Marina Calderone, has gathered consensus around the principle of stimulating domestic demand by increasing the net salary received by workers by virtue of a subsidised taxation, lower than the ordinary Irpef rate.
The cost of the measure is estimated at EUR 1.8 billion
A draft technical report estimates the cost of the measure at approximately 1.8 billion per year in lower IRPEF revenue, which corresponds, however, to a higher net income for employees benefiting from the flat rate tax, who will pay less tax on contractual increases. Assuming that a large part of this additional amount is spent on consumption, and considering an average effective VAT rate of around 10% on household consumption, the higher VAT revenue could be around 200 million per year when fully implemented. The cost of the measure is estimated to be around 1.8 billion per year in the form of lower IRPEF revenue
