2026 Budget Law

(effective from 1 January 2026)

Law No. 199 of 30 December 2025 introduces a broad set of measures affecting employees, the social security system and employment relationships. The main new provisions are outlined below:

Personal Income Tax (IRPEF): reduction of the second tax bracket from 35% to 33% for income up to €50,000; for income exceeding €200,000, the benefit is neutralised through a reduction in tax deductions.

Wages and labour taxation:

• 5% tax rate on wage increases resulting from collective agreement renewals signed in the 2024–2026 three-year period (for income up to €33,000);
• 1% tax rate on productivity bonuses and profit-sharing schemes, up to €5,000;
• 15% tax rate on additional pay for night work, work on public holidays and shift work, up to €1,500 (for income up to €40,000).

Meal vouchers: exemption threshold for electronic meal vouchers increased to €10 per day.

“Mothers’ bonus”: increased to €60 per month for female employees with at least two children and income up to €40,000.

Parental leave and children’s sick leave: extension of the usable periods and the relevant age brackets, with broader protection.

Retirement age: increased by 1 month from 2027 and by a further 2 months from 2028; the increase does not apply to arduous or hazardous occupations.

Social APE: extended for the categories already provided for.

Severance pay (TFR) and INPS Treasury Fund: extension of the mandatory contribution to companies that reach the threshold of 50 employees; from 2032 the threshold will be lowered to 40 employees.

Supplementary pension schemes: for new hires in the private sector, from 1 July 2026 automatic enrolment in a pension fund will apply after 60 days in the absence of an explicit choice (opt-out mechanism).

The partners and associates of De Luca & Partners Law Firm remain available for any further clarification or in-depth analysis.