30 December 2025
Compensation and benefits
Increase in meal voucher tax exemption
“2026 Budget Law”
The tax (and social security) exemption threshold for meal vouchers is increased from €8.00 to €10.00. This represents a significant revision of a widely used employee welfare tool.
30 December 2025
Social security and contributions
Increase in the tax-deductible threshold for supplementary pension schemes
“2026 Budget Law”
Starting from the 2026 tax year, the annual deductibility limit for contributions paid to supplementary pension schemes by employees and employers (or principals) is increased from €5,164.57 to €5,300.00.
30 December 2025
Incentives
Tax regime for managers in the financial sector
“2026 Budget Law”
As is well known, the variable remuneration of management in financial companies is subject to an additional 10% tax on variable compensation exceeding three times the fixed portion of remuneration (such as bonuses or stock options), whether paid to employees or coordinated and continuous collaborators (Art. 33, Decree Law No. 78/2010).
The Budget Law provides that this additional tax shall not apply, provided that the employer paying such compensation also pays an amount at least double the additional tax due to Third Sector entities (outside the corporate group).
30 December 2025
Incentives
Reduced tax on contract renewals, productivity bonuses and additional compensation
“2026 Budget Law”
For private-sector employees, the Budget Law introduces measures aimed at reducing the tax burden. The following remuneration components are subject to a substitute tax in place of IRPEF and regional and municipal surtaxes:
• 5% on wage increases paid in 2026 to employees who earned no more than €33,000 in employment income in 2025, in the case of collective bargaining agreement renewals signed in the years 2024–2026;
• 1% (instead of the previous 5%) on amounts paid as performance bonuses or profit-sharing schemes for the years 2026 and 2027, up to a maximum of €5,000 (previously €3,000);
• 15% on pay increases and allowances for night work, work on public holidays and weekly rest days, shift allowances and other compensation related to shift work provided for by national collective agreements, applicable only for 2026 and up to an annual limit of €1,500, limited to employees who earned no more than €40,000 in employment income in 2025 (employees may request the application of ordinary taxation instead).
The 50% tax exemption on dividends paid in 2026 to employees for shares assigned in lieu of performance bonuses is confirmed, up to a maximum of €1,500 per year.
30 December 2025
Incentives
Reduction of the IRPEF rate for the second tax bracket
“2026 Budget Law”
The Budget Law reduces the IRPEF rate from 35% to 33% for the income bracket between €28,000 and €50,000. The 23% rate remains unchanged for lower incomes, while income above €50,000 continues to be taxed at 43%.
30 December 2025
Incentives
Access to the flat-rate tax regime for VAT holders who are employees
“2026 Budget Law”
For 2026, the possibility to start or maintain a VAT number under the flat-rate tax regime is confirmed even for individuals who are also employees (or pensioners). The income threshold from employment (or pension) remains set at €35,000, confirming the increase from the previous €30,000.
30 December 2025
Incentives
Tax incentives for the tourism and hospitality sector
“2026 Budget Law”
For the period from 1 January to 30 September 2026, a special supplementary allowance is granted, exempt from taxation, equal to 15% of gross pay for night work or overtime performed on public holidays by employees in the tourism, hospitality and spa sectors. The incentive applies to employees who earned no more than €40,000 in employment income in 2025.
The employer will pay the allowance through the payroll—subsequently offset via Form F24—upon written request from the employee, together with a declaration confirming the income requirement.
