To reduce the tax burden on taxpayers, the Budget Law 2022 (Law no. 234/2022) has introduced important changes effective from 1 January 2022.
These include reducing the number of personal income tax (IRPEF) rates from five to four, reshaping the tax deduction system and supplementary payments.
Below are these changes.
New IRPEF rates
From 1 January 2022, the tax brackets and rates are:
To benefit those with average income, the rates for taxable income between €15,000 and €50,000 have been reduced and the tax rate for income above €50,000 has been increased (until 31 December 2021, the 43% rate was applied to income above €75,000).
Equally important was the impact of the tax deduction measure under Art. 13, of Presidential Decree no. 917/1986 ( Consolidated Law on Income Tax – TUIR). These reduce the gross tax payable by the taxpayer for the time worked during the year. The deduction from gross tax decreases proportionally to the income increase until it is cancelled when the income reaches the annual threshold of €50,000.
The deduction applicable to the income bracket between €25,000 and €35,000 is increased by €65.
The additional deduction applicable until 31 December 2021 for workers with income above annual €28,000 and up to a €40,000 has been abolished.
The Budget Law has lowered the income threshold for which the supplementary payment introduced by Law no. 21/2020 is due.
The maximum amount of the supplementary payment of €1,200 annually is no longer payable to taxpayers with a taxable income of €28,000 but €15,000.
The credit is available to those whose income is between €15,000 and €28,000 only if the value of the following deductions is higher than the gross tax:
The supplementary payment is based on the difference between the sum of the deductions listed above and the gross tax, but not exceeding € 1,200.