The 2025 Budget Law (Law No. 207 of December 30, 2024) officially came into effect on January 1, 2025.
Below, we present the main tax changes introduced, with a focus on those concerning individuals.
2024 IRPEF Reform (Article 1, Paragraph 2)
The 2025 Budget Law confirmed the IRPEF brackets already approved for 2024. Specifically, from 2025, the tax brackets and rates will be as follows:
- Up to €28,000 – 23%
- From €28,001 to €50,000 – 35%
- Over €50,001 – 43%
Tax deduction for employment income and certain assimilated ncome (Article 1, Paragraph 2)
The tax deduction for employment income and certain assimilated income under Article 13, Paragraph 1, Letter a) has been modified. The standard amount is now €1,955 (previously €1,880) for those with an income not exceeding €15,000.
Additional wage supplement for employees and certain assimilated income (Article 1, Paragraph 3)
The wage supplement granted to employees and certain assimilated income earners (Article 1, Paragraph 1, first period of Legislative Decree No. 3 of February 5, 2020) with total income not exceeding €15,000 will be provided if the gross tax exceeds the deduction for employment income, reduced by an amount equal to €75, proportionate to the work period in the year.
Reduction of the “Tax Wedge” for employees (Article 1, Paragraphs 4 – 9)
Measures have been introduced to reduce the tax wedge for employees under Article 49, Paragraph 2 of the TUIR, including:
- A bonus for those with total income not exceeding €20,000
- An additional tax deduction for those with total income between €20,001 and €40,000
The bonus for employees with total income up to €20,000 is determined as follows:
- 7.1% if employment income does not exceed €8,500
- 5.3% if employment income is between €8,500 and €15,000
- 4.8% if employment income exceeds €15,000
This bonus is not included in taxable income.
The additional tax deduction, calculated based on the work period, is:
- €1,000 if total income is between €20,000 and €32,000
- A scaled amount for incomes between €32,000 and €40,000:
(40,000–totalincome)/8,000(40,000 – total income) / 8,000(40,000–totalincome)/8,000 * €1,000
The total income for bonus eligibility includes tax-exempt income from special tax regimes (e.g., impatriate regime and researchers and lecturers). The bonus may be adjusted in the tax return to reflect additional income.
The bonus is granted automatically, with final adjustments at year-end. The employer can recover the credited amount through tax compensation (Article 17 of Legislative Decree No. 241/97).
Family tax deductions (Article 1, Paragraph 11)
- The deduction for dependent children over 30 years old (if not disabled) has been abolished.
- Deductions for other dependent relatives (except for cohabiting ascendants) have been abolished, specifically:
- Legally and effectively separated spouses
- Siblings
- Sons-in-law and daughters-in-law
- Non-cohabiting in-laws
- Deductions for non-EU citizens with dependents abroad have also been abolished.
Deduction limits for those earning over €75,000 (Article 1, Paragraph 10)
The new Article 16-ter of the TUIR introduces a revised calculation method for tax deductions based on total income and the number of dependent children.
For expenses incurred from January 1, 2025, individuals earning over €75,000 must comply with two limits:
- The limit set by each tax benefit regulation (maximum deductible amount or maximum deduction amount).
- The new limit introduced by Article 16-ter.
This new calculation applies to all deductible expenses except:
- Medical expenses
- Investments in innovative startups and SMEs
- Interest on mortgages signed before December 31, 2024
- Multi-year tax deductions for past expenses (e.g., home renovation)
- Life insurance premiums on policies signed before December 31, 2024
The base amount is:
- €14,000 for those earning between €75,000 and €100,000
- €8,000 for those earning over €100,000
The following coefficients apply:
- 0.5 if there are no dependent children
- 0.7 if there is one dependent child
- 0.85 if there are up to two dependent children
- 1 if there are more than two dependent children or at least one disabled dependent child
Further clarifications from the Tax Authority are expected regarding the implementation of these limits.
Increase in the deduction for school expenses (Article 1, Paragraph 13)
A 19% deduction is provided for expenses related to attending:
- Kindergartens
- Primary and middle schools
- High schools
From January 1, 2025, the deduction applies to a maximum of €1,000 per child, shared among eligible taxpayers.
Guide dog expenses (Article 1, Paragraph 229)
The flat-rate deduction for guide dog maintenance for the blind has increased to €1,100.
Fringe benefits for company cars (Article 1, Paragraph 48)
For new company cars assigned for mixed use under contracts signed from January 1, 2025, the fringe benefit value is calculated as follows:
- 50% of ACI tariffs
- 20% of ACI tariffs for plug-in hybrids
- 10% of ACI tariffs for fully electric vehicles
The taxable fringe benefit value is net of any amount contractually withheld from the employee.
Clarifications from the Tax Authority are awaited.
Reimbursement of rent for newly hired employees (Article 1, Paragraphs 386 – 389)
Rent and maintenance costs reimbursed by employers for newly hired permanent employees in 2025 will be tax-exempt for the first two years, up to €5,000 per year, provided that:
- The employee’s income was below €35,000 in the previous year.
- The employee relocated at least 100 km from their previous residence, as self-certified.
This exemption applies only for tax purposes, not for social security contributions. However, the amounts are considered for ISEE and eligibility for welfare benefits.
Fringe benefits – increased non-taxable threshold (Article 1, Paragraphs 390 – 391)
For 2025, 2026, and 2027, the non-taxable threshold for fringe benefits increases to:
- €1,000 for all employees
- €2,000 for employees with dependent children
If the total fringe benefit value exceeds these limits, the entire amount is taxable.
Cross-border workers in switzerland working remotely (Article 1, Paragraph 97)
Until the new Italy-Switzerland agreement takes effect, cross-border workers can work remotely for up to 25% of their time from their residence without losing their status. This remote work will be considered as performed in the employer’s country.
Conventional salaries – authentic interpretation (Article 1, Paragraph 98)
Article 51, Paragraph 8-bis of the TUIR allows taxable income to be based on standardized amounts instead of actual earnings for employees working abroad for more than 183 days in a 12-month period.
The new interpretation clarifies that this rule also applies to income earned from remote work in Italy for one day per week, with retroactive effect.
Productivity bonuses – reduced substitute tax (Article 1, Paragraph 385)
For 2025, 2026, and 2027, the substitute tax rate on productivity bonuses (Article 1, Paragraph 182, Law No. 208/2015) is reduced from 10% to 5%.
Exclusion from the flat tax regime (Article 1, Paragraph 12)
The flat tax regime does not apply to individuals earning over €30,000 from employment or assimilated income in the previous year, unless the employment relationship has ended.
Exceptionally, for 2025 only, the income threshold is raised to €35,000.
Taxation of crypto assets (Art. 1, paragraphs 24-29)
Capital gains and other income referred to in Art. 67, paragraph 1, letter c-sexies) of the TUIR realized from January 1, 2026, will be subject to a 33% substitute tax, with no exemption thresholds.
For crypto assets held as of January 1, 2025, the possibility of stepping up the tax cost has been reintroduced, by paying a substitute tax at 18%. The payment must be made by November 30, 2025, either in a single installment or in three installments, with interest at 3% applied to the second and third installment.
Building renovation – ecobonus and sismabonus (Art. 1, paragraphs 54 and 55)
For expenses incurred for building renovation from January 1, 2025, the deduction rate is 30% of the expenses.
For those carrying out renovation work on their primary residence, the tax deduction rates are:
- 50% for expenses incurred in 2025, up to a maximum of €96,000.
- 36% for expenses incurred in 2026 and 2027, up to a maximum of €96,000.
For renovation work on properties other than the primary residence, the tax deduction rates are:
- 36% for expenses incurred in 2025, up to a maximum of €96,000.
- 30% for expenses incurred in 2026 and 2027, up to a maximum of €96,000.
These same deduction rates also apply to the Ecobonus and Sismabonus.
From January 1, 2025, expenses for replacing heating systems with fossil-fuel boilers will no longer qualify for tax deductions.
Furniture bonus (Art. 1, paragraph 55)
The Furniture Bonus is extended, allowing a 50% deduction on purchases, up to a maximum expenditure of €5,000.
Superbonus (Art. 1, paragraph 56)
For expenses incurred in 2025, the 65% deduction under Art. 119, paragraph 8-bis of Decree-Law 34/2020 is available only if, by October 15, 2024:
- CILA-S has been submitted for all interventions except those by condominiums.
- For condominium projects, both the CILA-S and an assembly resolution approving the work must have been submitted.
- If the intervention involves demolition and reconstruction, an application for a building permit must have been submitted.
National identification code (CIN) in tax returns and CU certification (Art. 1, paragraph 78)
The CIN (Codice Identificativo Nazionale) must be included in tax returns and CU (Certificazione Unica) forms. It must also be provided in communications by intermediaries and online platforms involved in short-term rental agreements, with a deadline of June 30 of each year.
First home tax benefit with sale of previous primary residence (Art. 1, paragraph 116)
The deadline for selling the previous primary residence to maintain the first-home tax benefit has been extended to two years (previously one year, valid until December 31, 2024).
If the previous home is not sold within two years, the tax benefit is revoked, and the full tax rate and penalties apply, instead of the reduced 2% rate.
Tax Credit for Restoration of Historic and Artistic Properties (Art. 1, paragraph 593)
The tax credit for the maintenance, protection, or restoration of historic and artistic buildings has been extended for 2025, 2026, and 2027. The credit remains at 50% of expenses incurred by individuals.
Home appliances bonus (Art. 1, paragraphs 107-111)
In 2025, a contribution of 30% of the purchase cost is provided for appliances, up to:
- €100 or €200 for households with an ISEE below €25,000 per year.
This bonus applies if:
- The appliance is of high energy efficiency (minimum new class B) and produced in the EU.
- The old appliance is properly disposed of at the time of purchase.
Key updates for self-employed and freelancers
Tax Compliance Adjustment (Art. 7, DL 155/2024)
The tax compliance adjustment (ravvedimento operoso) is extended to ISA taxpayers with revenues up to €5,164,569, provided they did not apply ISA between 2018 and 2022 due to:
- Exclusions related to the pandemic.
- Non-standard business conditions.
- Multiple business activities, where revenues from non-ISA activities exceeded 30% of total revenues.
Two-year tax settlement agreement (Art. 7-bis, DL 155/2024)
The deadline for opting into the 2024-2025 two-year tax settlement (Concordato Preventivo Biennale, CPB) has been reopened. ISA taxpayers who did not join CPB by October 31, 2024, could do so by submitting a corrected tax return by December 12, 2024.
Mandatory tracking of travel expenses for professionals (Art. 1, paragraphs 81(b), 82, 83)
For self-employed professionals, travel expenses for:
- Hotel stays and meals
- Travel and transportation (taxi, car rentals with driver, etc.)
are deductible for business income and IRAP purposes only if:
- They are itemized and charged to the client.
- They match reimbursements for employee travel or freelancer expenses.
- Payments are made via traceable methods (e.g., debit/credit cards, bank transfers).
This rule takes effect from the tax period after December 31, 2024 (i.e., from 2025 for calendar-year taxpayers).
