As we know, with the “light” Def, the government decided to take its time. When the EU communicates to the countries in June the “trajectory” of net spending that is expected based on the new Stability Pact, “we will also know where to go to cut spending and find resources”, the Minister of Economy anticipated Giancarlo Giorgetti in the introduction to the Economics and Finance Document. Therefore, as far as tax reform is concerned, to confirm the cut in the wedge in 2025 it is very likely that the Meloni government will once again dip into the large item of tax credits. In fact, last autumn, Nadef anticipated that, within a spending review operation calculated at 10 billion euros in total, there would be room for the collection of resources under the heading “review and remodulation of spending” precisely between tax expenditures.
Tax expenditures
Beyond the tax credits on building bonuses, which have been widely discussed, the assault on the forest of tax expenditures is quite certain. The Parliamentary Budget Office has dedicated a study to it, from which it emerges that the interventions on tax deductions in the first module of the Irpef reform – the one which saw the reduction of 260 euros in deductions for taxpayers with an income exceeding 50 thousand euros – allow a rather “limited” recovery of revenue: the overall saving is in fact just 220 million euros. In short, little if you consider that, again according to the PBO, despite attempts to contain the tax credit items since 2009, these increased by a third between 2018 and 2024, going from 466 to 625; doubling the overall revenue loss, from 54 to 105 billion.
New declared objective: helping the middle class
Having said this, in mid-March, the Deputy Minister of Economy, Maurizio Leo, during an event organized in the Chamber on tax reform, said that on the topic of tax pressure «we have taken a first step to meet the medium-low groups, but now we have to deal with the middle class.” So, according to his words, if so far those who earn above 50 thousand euros have been penalised, from 2025 things should change (resources permitting). “Anyone who earns 55,000 euros cannot be considered super rich and today these individuals pay over 50% in taxes,” Leo said. The hypothesis on the table, therefore, is that the next step of the tax reform launched by the government could see an expansion of the average bracket (currently between 28 and 50 thousand euros) to bring, for example, up to 55 thousand euros below the rate of 35% (now 43% starts from 50 thousand euros). It would, however, be a very small intervention (it would only concern 5,000 euros of income) and which, therefore, could be accompanied by other interventions, such as the reduction of the rate of the second bracket (for example to 34%) or the highest one, from 43 to 42%.
How the salaries of incomes above 50 thousand euros could change
To find out how salaries could generally change in 2025, we had made a series of hypotheses (read them here) with the help of the National Accountants Foundation. In a nutshell, if we try to imagine a possible reduction in the rate of the second income bracket, the one between 28 thousand and 50 thousand euros of income, there would be around 10 million taxpayers affected (around 25.4% of total taxpayers which declares approximately 54% of taxable income). For example, a reduction in the rate of this bracket from 35 to 34%, therefore by one percentage point, would lead to a reduction in the Irpef, all other conditions being equal, up to a maximum of 220 euros for those who declare 50 thousand euros of income and would remain so for all those who declare a higher income. If we imagine, however, a reduction of one percentage point in the third Irpef rate, currently equal to 43%, for those who declare more than 50 thousand euros of income (around 2.5 million taxpayers, 6.4% of the total who declares 25.3% of taxable income), this reduction would determine a zero advantage for those with an income equal to or less than 50 thousand euros, the accountants explained, and a positive and gradually growing advantage for those who declare more than 50 thousand euros up to 500 euros for those who declare 100 thousand euros of income. An advantage which, at least in absolute terms, rises even more for those who declare higher figures. All this, however, remains confined to hypotheses. The problem of raising funds is more relevant than ever.
