The Italian government, under the leadership of Prime Minister Giorgia Meloni, is preparing to implement the new budget for 2025, which carries significant measures aimed at supporting families and modifying tax structures. The budget, amounting to 28.4 billion euros, has already been approved by the Camera and is now awaiting the Senate's final approval, expected on December 28, 2024.
This new financial plan introduces various initiatives intended to bolster family welfare and streamline fiscal obligations. Among the more notable features is the introduction of a one-time bonus of 1,000 euros for every child born or adopted starting January 1, 2025, aimed at encouraging higher birth rates. This bonus will be available to families whose annual income, measured by the ISEE rating, does not exceed 40,000 euros.
Another key feature is the enhancement of parental leave provisions. The budget will now grant new parents 80% of their salary for parental leave taken during the first three months following the expiration of maternity or paternity leave, elevated from the previous 60% during the second month and 30% for the third month. This kind of support is anticipated to provide much-needed assistance to families, particularly those with newly arrived children.
The budget also lays out changes to Italy's personal income tax structure. The IRPEF will be consolidated down to three brackets: 23% for earnings up to 28,000 euros, 35% for income between 28,001 and 50,000 euros, and finally, 43% for those earning over 50,000 euros. This restructuring is set to widen the scope of tax relief, as the threshold for benefiting from the tax cut will now include incomes up to 40,000 euros, up from the previous limit of 35,000 euros.
The fiscal reforms aim to mitigate the tax burden on workers, particularly those earning lower to middle incomes. A bonus scheme will provide extra financial relief for individuals making up to 20,000 euros annually, with additional supports for higher income brackets through gradually tapering deductions.
To help counter the rising cost of living, the budget reaffirms commitments to existing social welfare programs. The funding for the "Carta Dedicata A Te" initiative, which allocates resources for purchasing basic necessities for low-income families, has been increased by 500 million euros. This emphasizes the government’s focus on supporting its most vulnerable citizens during challenging economic times.
For businesses, particularly small and medium enterprises (SMEs), the budget introduces favorable tax incentives. Namely, companies investing at least 30% of their profits back within the country may see their effective corporate tax rate drop from 24% to 20%. The strategy under the IRES regulation is meant to encourage reinvestment, thereby invigorate the national economy and create job opportunities.
An interesting element of the budget focuses on pensions. While the minimum pension will see only nominal increases, rules around early retirement will be relaxed, offering more flexibility to those who began contributing to national insurance after 1996. Specific provisions mean individuals could potentially retire by 64, incorporating both mandatory and supplemental pension contributions to achieve pensions equal to three times the minimum standard.
Overall, these measures reflect the Italian government's attempt to cater to differing segments of the populace—from families and retirees to businesses. The proposed budget seeks not only to alleviate immediate financial pressures faced by households but also to create conditions favorable for economic growth moving forward.
Despite the positive framework outlined by the government's budgetary plans, debate continues around the sustainability of these initiatives and their effectiveness. Critics argue about the need for comprehensive reforms rather than piecemeal approaches focusing solely on incentives and bonuses, stressing the importance of creating systemic solutions for long-term prosperity.
The outcome of the Senate's vote on the budget will be pivotal; not only does it represent the government's economic priorities but it will also shape the fiscal environment for millions of Italians throughout 2025 and beyond. The final decision is poised to address urgent societal concerns, encompassing family welfare, tax reform, and support for the general economy. Reaction from the public and various political factions will undoubtedly follow, underlining the significance of policy decisions at this crossroads for Italy's future.
