Italian 2024 tax reform: changes for workers and businesses are on the way

25 January 2024

Among the most important changes governed by Italian Legislative Decree no. 216/2023, which came into force on 1 January 2024, is a revision of the main income tax, IRPEF (imposta sul reddito delle persone fisiche). For 2024, in fact, three tax brackets are expected to be applied, replacing the four in force until 2023. In this regard, Article 1 of the decree, entitled “Revision of the personal income tax regulation”, provides for the application of a rate of 23% for income up to EUR 28,000, 35% for income between EUR 28,000 and EUR 50,000 and 43% for income of EUR 50,000 and over. In essence, the second IRPEF bracket of 25%, which applied to incomes between EUR 15,000 and EUR 28,000, has been abolished.Article 1, paragraph 2, also provides that, for 2024 only, the tax-free amount for employed taxpayers whose income is less than EUR 15,000 is raised to EUR 1,955, compared to the previous EUR 1,880. With regard to corporate taxation, relief has been introduced for new recruitment: specifically, the cost of newly hired personnel with a permanent employment contract is increased, for the purposes of determining business income, by an amount equal to 20% of the cost attributable to the increase in employment. This relief is only available to entities that have carried out their activities for at least 365 days in the tax period in progress as of 31 December 2023. Companies and entities in ordinary liquidation, subject to judicial liquidation or other liquidation procedures related to the business crisis are not eligible for this relief. Finally, the decree specifies that employment increases are relevant provided that the number of permanent employees at the end of the tax period following the one in progress as of 31 December 2023 is higher than the number of permanent employees employed on average in the previous tax period.

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