Italy’s Council of Ministers approved its 2027 budget draft, introducing higher corporate taxes for banks and insurers, changes to personal income tax brackets, expanded hiring incentives, and tax relief for businesses, workers and homeowners.
Italy’s Council of Ministers, following a proposal by Minister of Economy and Finance Giancarlo Giorgetti, approved the draft law for the State Budget 2027 and the multi-year framework for 2027–29.
As the final financial bill put forward under Prime Minister Giorgia Meloni prior to national elections due the following year, the expansionary package is valued at approximately EUR 26 billion in 2027 and EUR 27 billion in 2028.
The key tax measures of the 2027 state budget are as follows:
Corporate sector measures
- Financial sector levies: The corporate tax (IRES) rate increases to 30.5% for banks (up from 27.5%) and 27% for insurers (up from 24.1%), alongside higher IRAP contributions and an increased Tobin tax on financial transactions.
- Energy, gaming & ministry cuts: Energy companies and gambling operators will each contribute EUR 700 million in additional levies, supported by EUR 1 billion in expenditure cuts across state ministries.
- Tax relief for business and agriculture: The plastic and sugar taxes are suspended until 1 July 2027, while agricultural diesel tax relief is maintained.
Personal income Tax (IRPEF) & labour measures
- IRPEF bracket extension: The 33% personal income tax rate bracket (previously applying to incomes between EUR 28,000 and EUR 50,000) is extended to cover earnings up to EUR 55,000. Earnings above EUR 55,000 remain taxed at 43%.
- Self-employed flat-rate regime: The revenue ceiling for the 15% flat tax for sole proprietors and freelancers increases from EUR 85,000 to EUR 100,000. Extending the associated VAT exemption for revenues between EUR 85,000 and EUR 100,000 remains subject to formal negotiations and approval from the European Commission. The secondary employee income limit for regime eligibility returns to EUR 30,000.
- Salary increases & performance bonuses: The reduced 5% substitute tax rate on salary increases tied to collective bargaining (CCNL) contract renewals is maintained for 2027. The 1% substitute tax on workplace performance bonuses (up to EUR 5,000) is confirmed.
- Youth & first-time workers: a 1% substitute tax is introduced for 2027 on employment income increases for young workers within specific thresholds. The tax-free limit for employee fringe benefits is raised to EUR 2,000 for employees under 30.
- Hiring incentives: Corporate tax deductions for new hires increase to 80% for working mothers and 40% for youth under 36. Social contribution exemptions for hiring women, young workers, and employees in Special Economic Zones (SEZs) are extended through 31 December 2027.
Real estate & housing policies
- Rent-controlled leases: The flat tax on rent-controlled leases drops from 10% to 5%, and further reduces to 1% when leasing to tenants aged 35 or under. The flat tax framework is also extended to commercial real estate leases.
- Building renovations & furnishings: The Bonus Ristrutturazioni tax deduction is confirmed at 50% for primary residences (36% for secondary properties). The Bonus Mobili furniture deduction is confirmed for purchases up to EUR 5,000.
- Vehicle tax relief: The vehicle road tax (bollo auto) exemption for passenger cars up to 80 kW and motorcycles becomes permanent, benefiting approximately 70% of circulating vehicles. Optional customised vehicle license plates are introduced for a dedicated fee.
