Published in the Official Gazette on December 30, 2023, Law No. 213 of December 30, 2023, contains the “Budget Forecast for the State for the Financial Year 2024 and Multi-year Budget for the Period 2024-2026”. The Budget Law 2024 has been in effect since January 1, 2024, and includes, among other measures:
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Partial Exemption of Social Security Contributions for Employees
In paragraph 15, the 2024 Budget Law provides for the partial exemption of social security contributions for employees (IVS exemption) for pay periods from January 1, 2024, to December 31, 2024. This exemption will be:
- 7% if the taxable income does not exceed €1,923.00 monthly;
- 6% if the taxable income is between €1,923.00 and €2,692.00 monthly.
The “novelty” compared to previous versions of the exemption concerns the non-applicability of the exemption to the 13th-month pro-rata.
New Exemption Limits for Fringe Benefits
The value of goods provided, services rendered, sums paid by the employer to employees for the payment of domestic utilities, expenses for renting the first home, as well as interest on the mortgage for the first home, will not contribute to income within the limit of:
- €1,000.00 for employees without fiscally dependent children;
- €2,000.00 for employees with fiscally dependent children, including children born out of wedlock, recognized, adopted, or entrusted.
Tax Relief for Performance Bonuses
The reduction from 10% to 5% of the substitute tax rate on IRPEF and related regional and municipal surcharges on performance bonuses and forms of profit participation for the year 2024 is extended. The annual limit for the total amount eligible for tax relief is €3,000.00 (gross), and the application of this regime is subject to the condition that the income from dependent work has not been subject to tax reduction exceeding €80,000.00 in the previous year of receiving the remuneration.
Decontribution for Working Mothers with Children
The 2024 Budget Law introduces, in Articles 1, paragraphs 180-182, from January 1, 2024, to December 31, 2026, a 100% exemption from social security contributions for working mothers, hired with an indefinite contract, with three or more children up to the month of completion of the eighteenth year of age of the youngest child. Experimentally, for pay periods from January 1, 2024, to December 31, 2024, this exemption is also granted to working mothers of two children with an indefinite employment relationship until the month of completion of the tenth year of age of the youngest child. This exemption is calculated within a maximum limit of €3,000.00 recalibrated on a monthly basis.
IRPEF – New Tax Brackets:
For 2024, the first two IRPEF brackets are merged, reducing the number of income brackets and corresponding progressive tax rates from four to three. A gross tax of 23% is envisaged with a single bracket up to €28,000, specifically:
- 23 percent for incomes up to €28,000;
- 35 percent for incomes between €28,000 and €50,000;
- 43 percent for incomes over €50,000.
The unification of the first two brackets at the 23% rate concerns all IRPEF taxpayers with incomes exceeding €15,000, resulting in a tax reduction of up to a maximum of €260.00 annually. Furthermore, the deduction for holders of dependent work income is increased from €1,880 (value until 2023) to €1,955.
In Conclusion
From the reading of these measures, it appears that the effort of the 2024 Budget Law is oriented towards reducing the tax burden and supporting the moderate to low incomes of employed workers.
