La manovra 2025

Up to EUR 45,000

Labour and cutting the tax wedge: new bonuses and deductions from January

Abandoned the reduction of the employee's contribution share

22 December 2024

3' min read

From 2025 increase in the pay packet of up to EUR 1,000 net per year for workers with a salary between EUR 37,000 and EUR 44,000 per year.

From the same year, both the cut of the tax wedge and the taxation with three tax rates and three income brackets already introduced, for the year 2024 only, by Article 1, paragraph 2, of Legislative Decree 216/2023 are to be considered structural for natural persons. This is provided for in the Budget Law 2025.

In addition to the change in income brackets and tax rates, the extension of the no-tax-zone threshold for employment income to EUR 8,500 from 2025 onwards is final, thus being equalised with the already existing threshold for pensioners.

The wedge cut no longer applies to the employee's share of the contributions, but changes its skin. Let us see how.

Up to 20,000 euro income

Holders of employment income who have a total income not exceeding EUR 20,000 instead of the lower contribution deduction are entitled to a sum calculated by applying a percentage that varies according to the amount of the same category income to the employment income received. In particular, if the employee income:

- does not exceed EUR 8,500, the 7.1% rate applies;

- exceeds EUR 8,500 but does not exceed EUR 15,000, the 5.3% rate applies;

- exceeds EUR 15,000, the 4.8% rate applies.

The sum does not contribute to the formation of income and reasonably does not constitute taxable income.

Over 20 thousand and up to 40 thousand euro income

If, on the other hand, the total income exceeds EUR 20,000 but not EUR 40,000, a deduction is recognised, to be related to the period of work, of an amount that varies depending on the amount of the worker's total income.

In particular, the rule provides that if the total income does not exceed 32 thousand euros, the deduction is fixed and is equal to one thousand euros. If the total income exceeds EUR 32,000, the deduction is decreasing as the income rises, and is zero for persons with an income of EUR 40,000. The result of this change in the calculation is that up to an income of 32 thousand euro from 2025 onwards, there is full continuity with the past. On the contrary, for those who earn more (and up to EUR 44,000 in income) there is an advantage of up to just under EUR 1,000.

Wages are paid automatically, i.e. without the need for an application by the employee.

If it turns out at the time of adjustment that the benefits are not due, the withholding agents shall recover the relevant amount. In the event that the amount exceeds EUR 60, it is recovered in ten equal instalments starting from the salary that discounts the effects of the adjustment.

The tax withholding agent that pays sums to workers with a total income of up to EUR 20,000 accrues a credit that it can offset in F24.

In order to determine the total income and the employment income, it is also necessary to take into account the exempt portion of the income facilitated under the provisions favouring the return of workers to Italy. Moreover, it must be taken into account that the total income is assumed net of the income of the real estate unit used as main dwelling and of that of its appurtenances.

The overall annual effect on the public accounts is EUR 12,971.8 million per year, to be divided between the higher spending effect of the bonus and the lower revenue for the additional deduction on employee income.