Drafted by Marzio Scaglioni, Leila Rguibi and Antonio Giardina
On December 30th, 2023, Legislative Decree No. 216/2023 (hereafter the “Decree“) was published in the Italian Official Gazette, titled “Implementation of the first module of the reform of personal income taxes and other measures on income taxes“.
The above Decree has been issued by the government currently in charge and it is part of a broader and more general framework of reform of the Italian tax system announced over the past year.
The act under analysis introduces, on one hand the reform – for the year 2024 only – of IRPEF rates and, on the other hand, the amendments of tax-detraction charges and expenses as well as a substantial deduction (up to 120% percent) in reference to permanent hires made during 2024 by Companies holders of business income and exercising arts and professions.
In light of this reform, the Article 1 of the Decree has provided for a reduction to no. 3 IRPEF rates (instead of the former no. 4) as of January 1st, 2024, with each rate corresponding to the specific annual income bracket according to the following scheme:
| Till to December 31st, 2023 | From January 1st, 2024, till to December 31st, 2024 |
| (1) up to €15,000,00 – 23% | (1) up to €28,000 – 23% |
| (2) from €15,001.00 and up to €28,000.00 – 25% | (2) from €28,001 and up to a €50,000 – 35% |
| (3) from €28,001 and up to €50,000 – 35% | (3) from €50,001 – 43% |
| (4) from €50,001 – 43% | – |
It is reflected in the above amendments that the former first two income brackets are merged into a single bracket to which the 23% rate will be applied in 2024.
In addition, Article 1, paragraph 3 of the Decree modifies the employee tax-detraction (provided for in Article 13, paragraph 1 of Presidential Decree No. 917/1986 – hereinafter “TUIR“); indeed, an increase from €1,880 to €1,955 of the detraction provided for holders of employee income (excluding pension income) and certain equivalent income up to €15,000 (e.g. amounts derived from scholarships, allowances, prizes and subsidies paid for the purpose of study or professional training, or amounts derived from compensation received in connection with socially useful work and in accordance with specific regulatory provisions, etc..).
Concurrently, in light of the aforementioned reform and in order to avoid the loss of the benefit of the sums paid as “Trattamento Integrativo” (governed by Article 1, paragraph 1, first sentence, of Law Decree no. 3/2020), it has been also provided for adjustments to entitlement to the concerned sums for all taxpayers with a with total income not exceeding €15,000.
More in detail, this benefit is entitled in the event that the gross tax determined on the income referred to in Articles (i) 49, (excluding those derived from pensions of all kinds and allowances treated as such (Article 49, paragraph 2, lett. a) of the TUIR), and (ii) 50, paragraph 1, letters a), b), c), c-bis), d), h-bis) and l) of the TUIR, is higher than the amount of the detraction due under Article 13, paragraph 1, of the aforementioned TUIR of income taxes decreased by the amount of €75 – i.e. equivalent to the above-mentioned increase in the tax detraction – related to the period of work performed in the tax year.
The Decree – in Article 2 – also provides for a revision of the regulations on tax detraction for gross tax; specifically, for the year 2024 only and with reference to taxpayers with a total income exceeding €50,000, a reduction of €260 has been introduced with respect to the normal tax detraction due:
- for all those charges whose tax detraction’s threshold is equal to 19% (e.g., interest expenses arising from mortgage contracts), with the exception of health care expenses provided for in Article 15, paragraph 1, letter c) of the TUIR;
- in reference to outright disbursements in favor of political parties provided for in Article 11 of Law Decree no. 149/2013, which regulates the abolition of direct public financing to political parties;
- for the payment of insurance premiums against the risk of calamitous events referred to in Article 119, paragraph 4, fifth sentence, of Law Decree no. 34/2020 on urgent measures introduced in relation to the health emergency by Covid-19.
In addition, within Article 3 of the Decree, the Italian Government also provided guidance for updating regional and municipal additional taxes. More in detail, it was provided that in order to ensure the consistency of the brackets of regional and municipal additional taxes with the new brackets provided for the purpose of determining the “IRPEF”, Regions and Municipalities for the year 2024, will have – within April 15th , 2024 – to adjust the brackets and rates of the relevant additional taxes with the purpose to comply with the new structure provided for the personal income tax.
Furthermore, the Legislator has provided for the possibility that Regions and Municipalities may set – for the year 2024 only and while awaiting the general reform of the taxation of territorial entities – differentiated rates with reference to the relevant additional taxes on the basis of the income brackets provided for the determination of the gross personal income tax. Finally, in case the deadline of April 15th, 2024, for the purpose of issuing the relevant above rulings is not met, the aforementioned regional and municipal additional taxes will be applied on the basis of the income brackets and rates in force for the year 2023.
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