Italian 2026 Finance Law
Overview
Budget Law 2026 — Approved and Official
Summary of the fiscal measures contained in the 2026 Italian Budget Law
The Italian Parliament has definitively approved the 2026 Budget Law. After the Chamber of Deputies’ vote on 30 December, the President of the Republic promulgated the law the same day. It was published in the Official Gazette as Law No. 199 of 30 December 2025, entitled:
“State Budget for the 2026 Financial Year and Multi‑Year Budget for 2026–2028.”
The article provides an overview of some of the tax measures included in the law.
Key Fiscal Measures
1. Personal Income Tax (IRPEF) Reform
The second IRPEF bracket is reduced from 35% to 33%.
For taxpayers earning over €200,000, certain tax deductions are reduced by €440, including:
19% deductible expenses (excluding medical) Political donations
Insurance premiums for natural disaster coverage
2. Flat-tax/HNWI“new-resident” regime adjustment (for high net-worth individuals)
The special tax regime for “new residents” (people transferring residence to Italy who produce income abroad) — the lump-sum substitute regime — is proposed to be increased: the annual flat tax for these non-resident-to-Italy immigrants is increased from Euro 200,000 to 300,000 and from Euro 25,000 to Euro 50,000 for family members.
3. Taxation of Contract Renewals, Productivity Bonuses & Allowances
For private‑sector employees:
5% substitute tax on wage increases in 2026 for employees earning ≤ €33,000 in 2025.
1% substitute tax (down from 5%) on productivity bonuses and profit‑sharing for 2026–2027, with the annual limit raised from €3,000 to €5,000.
15% substitute tax on night work, holiday work, weekend work, and shift allowances (up to €1,500), for employees earning ≤ €40,000 in 2025.
Workers may opt out and choose ordinary taxation.
50% exemption on dividends paid to employees under corporate share‑participation schemes (up to €1,500).
4. Meal Vouchers
Non‑taxable limit for electronic meal vouchers increased from €8 to €10 per day.
5. Agricultural Sector Measures
IRPEF exemptions for agricultural income extended through 2026:
100% exemption up to €10,000
50% exemption between €10,000 and €15,000
Applies only to individual farmers and agricultural entrepreneurs (IAP).
6. Short‑Term Rentals
From 2026, income from three or more short‑term rental properties is presumed to be business income (previously five properties).
7. Tourism & Hospitality Workers
A 15% tax‑free supplemental allowance for night, holiday, and overtime work from 1 January to 30 September 2026, for employees earning ≤ €40,000 in 2025.
8. Building Renovation & Energy Efficiency Deductions
2025 incentives extended through 2026:
36% or 50% deductions for renovations, energy savings, and seismic improvements
“Furniture bonus” confirmed (up to €5,000)
9. Five‑per‑Thousand (5×1000) Funding
Annual allocation increased from €525 million to €610 million starting in 2026.
9. Flat Tax Regime Access
Income threshold for employees wishing to access the flat‑rate regime remains at €35,000 for 2026.
10. Crypto‑Asset Taxation
Electronic‑money tokens denominated in euros are excluded from the capital‑gains tax increase (26% → 33%).
Conversion between euros and euro‑denominated tokens does not generate taxable gains/losses.
Financial transaction tax (“Tobin tax”) increases:
Shares: 0.2% → 0.4%
High‑frequency trading: 0.02% → 0.04%
11. Favourable Asset Transfers to Shareholders
Reintroduction of the “facilitated asset assignment” regime for non‑instrumental assets transferred to shareholders by 30 September 2026.
Substitute tax:
8% (or 10.5% for non‑operational companies)
Suspended‑tax reserves taxed at 13%
12. VAT Rules for Failed to File Returns
The Tax Agency may assess VAT based on:
E‑invoices issued/received
Telemetric receipts (digital receipt data that shops, bars, restaurants, and other retailers send automatically via fiscal cash registers etc.)
Periodic VAT communication data
Taxpayers have 60 days to respond or pay.
13. Horizontal Tax Offsetting
Threshold for blocking cross‑tax offsets reduced from €100,000 to €50,000.
14. Plastic Tax & Sugar Tax
Both taxes postponed to 1 January 2027.
15. Customs Fee on Small Imports
A €2 fee applies to non‑EU imports valued ≤ €150.
16. Fuel Excise Alignment
Excise duties on petrol and diesel harmonised at €672.90 per 1,000 litres.
17. Complementary Pension Contributions
Annual deductible limit increased from €5,164.57 to €5,300 starting in 2026.