The 2026 Budget Law (Law 199 2025) just published in the Official Journal introduces a complex package of measures that directly and indirectly impact the wages of employees, the taxation of income from work and social security choices, with the declared objective of supporting purchasing power, encouraging collective bargaining and encouraging forms of supplementary social security.
The changes are not limited to salary increases or performance bonuses, but also involve IRPEF, deductions and severance pay, with concrete effects on paychecks starting from 1 January 2026 (and, for some profiles, from 1 July 2026).
Let’s see a summary of the new features in the following paragraphs.
Read for a general summary: Budget law 2026 the main measures
1) Reduction of the intermediate IRPEF rate and remodulation of deductions
One of the interventions with the greatest impact for employees concerns the reduction of the intermediate IRPEF rate, which goes from 35% to 33% for incomes between 28,000 and 50,000 euros. The new structure of personal income tax is therefore divided into three brackets:
- 23% for incomes up to 28,000 euros
- 33% for incomes from 28,000 to 50,000 euros
- 43% for incomes over 50,000 euros
The measure produces a reduction in the tax burden especially for employees in the medium income bracket, with a benefit that is directly reflected in the net pay slip.
Alongside the reduction in rates, the measure also affects tax deductions. With the modification of the art. 16-ter of the TUIR, the new paragraph 5-bis is introduced, which provides, for taxpayers with a total income exceeding 200,000 euros, a flat-rate reduction of 440 euros in the deductions due for:
- charges deductible at 19%, with the exclusion of healthcare costs;
- liberal donations to political parties;
- insurance premiums against natural disasters.
The “cut” therefore does not concern medical expenses, but it reduces the tax benefit for higher incomes, strengthening the principle of tax progressivity.
We also recommend the eBook of the series Easy for everyone
2) Concessionary tax increases, bonuses, overtime and allowances
The heart of the measures on employee wages is contained in paragraphs 7 to 13, which introduce favorable tax regimes for various components of remuneration starting from 1 January 2026.
In particular, salary increases deriving from contractual renewals stipulated in the period 2024-2026 and paid in 2026 to private sector workers are subject, unless waived by the employee, to a 5% substitute tax (instead of the ordinary IRPEF and the additional ones).
ATTENTION though: the benefit is reserved for workers with an income not exceeding 33,000 euros.
The planned regime is even more favorable for performance bonuses and profit sharing, for which:
- the substitute tax drops to 1%;
- the annual limit of the eligible amount increases from 3,000 to 5,000 euros for the two-year period 2026-2027.
The maneuver also affects the iallowances and increases for night, holiday and shift work: within the limit of 1,500 euros per yeari, answer somme are subject to a 15% substitute tax. For the tourism and spa sectors, however, the special regulations already in force remain confirmed.
among the measures that have an impact indirectly the increase in the non-taxable value of electronic meal vouchers is included in the salary, which goes from 8 to 10 euros for each voucher. The intervention strengthens the role of fringe benefits as a corporate welfare tool, allowing employers to recognize an economic advantage to employees without increasing taxes and contributions.
3) Overtime work and the tourism sector: supplementary treatment confirmed
In the particular case of employees of tourist-hotel facilities, lThe 2026 Budget Law extends the special supplementary treatment already experimented in previous years.
From 1 January to 30 September 2026, overtime work carried out on public holidays or at night gives the right to an amount equal to 15% of the gross salary, which does not contribute to the formation of income.
The benefit is available to workers with an income from employment not exceeding 40,000 euros, upon written request to the employer and certification of the income received in the previous year.
4) Incentive to stay at work, deductibility of pension fund contributions
A further measure that may affect remuneration concerns in particular employees who qualify for early retirement but choose to continue working. The incentive that allows the worker to renounce the INPS contribution credit is also confirmed for 2026 of the IVS quota paid by you, receiving in exchange the corresponding amount directly in your pay slip, with exclusion from the taxable amount.
On the social security front, paragraph 201 introduces a significant intervention for employees who participate in forms of supplementary social security:
Starting from 1 July 2026, the portion of contributions deductible from income tax increases from 5,164.57 to 5,300 euros per year.
The rule does not limit itself to expanding deductibility, but also modifies the regulation of benefits, expanding the possibilities of:
- liquidation in the form of capital;
- access to alternative types of annuity to the life annuity, with specific tax treatment for defined contribution forms.
The intervention strengthens the role of complementary pensions as a supplementary instrument for future income, with indirect effects also on remuneration planning and severance pay.
5) TFR destination: what’s new from July 2026
Again with regard to severance pay, i.e. the deferred remuneration at the end of the employment relationship, it should be noted that for new hires starting from 1 July 2026 there will be a silence period of 60 days that is, in the absence of communication from the worker, the amounts will automatically be paid to the supplementary pension fund provided for by the collective agreement.
The same rule will apply to workers already employed who have already joined the pension funds.
At the time of hiring, the employer must inform the worker about these news and verify his social security position.
