Main Innovations of the 2026 Budget Law
Law No. 199 of December 30, 2025 introduced the 2026 Budget Law, which includes a series of changes regarding taxation, labor, and incentives. Below are some of the main innovations.
DIRECT TAXES
- IRPEF rates: reduction of the second bracket to 33%: The rate on taxable income over €28,000 and up to €50,000 decreases from 35% to 33%. Applicable from the 2026 tax year; withholding agents will start adjusting payroll withholdings in 2026.
- Deductions for expenses: €440 cut for incomes > €200,000: From 2026, the deduction for certain expenses is reduced by €440 for those with total income exceeding €200,000 (calculated under specific rules).
- Electronic meal vouchers: tax-free threshold raised to €10: The non-taxable amount for electronic meal vouchers increases from €8 to €10, while paper vouchers remain at €4.
- Agricultural land income (CD/IAP): IRPEF exemption confirmed for 2026: Continued exemption from IRPEF for certain brackets of land and agricultural income for registered farmers and professional agricultural entrepreneurs.
- Euro-denominated stablecoins: income taxed at 26%: For electronic money tokens pegged to the euro (with reserves held in euros at EU entities), capital gains/distributions are taxed at 26% (instead of 33%). Conversions euro↔token and nominal refunds do not trigger taxable events.
- Installment taxation of business capital gains: abolished (except for business transfers): Capital gains on business assets and non-exempt shareholdings are fully taxable in the year of realization (installment option remains only for business/branch transfers held for ≥3 years).
- Dividends/capital gains: minimum participation requirement: For partial exemption (PE/PEX), in addition to standard conditions, holdings must represent at least 5% of share capital or have a tax value ≥ €500,000. Applies to dividends distributed from January 1, 2026.
- Tax valuation of bonds and mass securities: New rules for write-downs of bonds and securities in series or mass recorded as current assets or fixed assets.
- Tax relief on performance bonuses and profit-sharing: For 2026 and 2027, the substitute tax rate drops from 5% to 1% up to €5,000. The exemption on dividends paid to employees through shares granted in lieu of bonuses is also extended.
- Photovoltaic energy – Exclusion from flat-rate income regime for ground-mounted systems installed after 12/31/2025: Agricultural businesses installing ground-mounted photovoltaic systems after this date can no longer apply the flat-rate regime for production exceeding the “agricultural threshold” (260,000 kWh/year).
- New rate for revaluation of shareholdings: The substitute tax for revaluing shareholdings (listed and unlisted) rises from 18% to 21% for transactions completed by November 30, 2026.
- Limits on use of tax losses and ACE surplus: Use limited to 35% (2026) and 42% (2027) of additional taxable income generated by specific provisions; also applies to consolidated groups.
VAT AND OTHER TAXES
- VAT for barter transactions and payments in kind: new taxable base: From January 1, 2026, the taxable base is no longer the normal value but the total costs related to the transfer/service.
- Omitted VAT return: automatic assessment: Automatic calculation of VAT due based on e-invoices, telematic receipts, and periodic VAT communications (LIPE).
- Levy on small non-EU shipments (declared value ≤ €150): €2: New charge to cover customs administrative costs, payable upon import, effective January 1, 2026.
- Tax-free shopping – simplifications: Single validation for electronic invoices issued to the same purchaser upon leaving the EU customs territory and extended deadline (6 months) for returning the stamped invoice.
- Tobin tax – rates doubled: Tax on transfers of shares/participatory instruments rises to 0.4% (OTC) and 0.2% (regulated markets); high-frequency transactions taxed at 0.04% from January 1, 2026.
- E-invoicing: data usable for garnishments: The Collection Agency may use the sum of semi-annual invoice totals to the same client for analysis and enforcement actions.
- Plastic tax and sugar tax: postponed to January 1, 2027: Further deferral of the entry into force of taxes on single-use items and sweetened beverages.
- Withholding tax on B2B transactions (from 2028): A withholding tax on payments for goods and services between businesses: 0.5% in 2028 and 1% from 2029. Exemptions for cooperative compliance and CPB regimes.
INCENTIVES
- Hyper-depreciation 4.0/5.0 (2026–2028): Increased tax basis for eligible 4.0 and 5.0 assets for depreciation/leasing: +180% up to €2.5M, +100% between €2.5–10M, +50% between €10–20M.
- Tax credits for Southern Italy ZES: extended 2026–2028: Extension with additional 14.6189% for those who filed an integration in 2025 without obtaining the “Transition 5.0” credit.
- Tax credit 4.0 for agriculture/fishing (2026–2028): 40% credit up to €1M for investments in eligible tangible/intangible 4.0 assets.
- Tax credit for investments in ZLS: extended 2026–2028: Measure extended for Simplified Logistics Zones, subject to timely filings.
- “Nuova Sabatini”: refinancing: €200M allocated for 2026 and €450M for 2027 to support SME investments in capital goods.
- Debt settlement (“rottamazione quinquies”) for 2000–2023 liabilities: Cancellation of penalties, interest, and collection fees for unpaid taxes, INPS contributions (not assessed), and traffic fines upon application.
- Ban on offsetting with overdue tax debts: threshold lowered to €50,000: The threshold triggering the ban drops from €100,000 to €50,000.
- Facilitated allocation/transfer of assets to shareholders: Tax benefits for asset transfers (real estate or registered movable assets) completed by September 30, 2026.
- Facilitated removal of business property for sole proprietors: Extended deadlines for transferring property from business to personal sphere with reduced tax.
- Extraordinary release of suspended reserves: Option to apply a 10% substitute tax on converting tax-suspended reserves into distributable profit reserves.
- Earthquake exemptions (Central Italy 2016–2017) and ZFU: extensions: IRPEF/IRES and IMU exemptions for destroyed/uninhabitable buildings and ZFU benefits extended through 2026.
- Exception to valuation rules for securities in current assets (OIC): For 2025–2026, reintroduced option to maintain prior-year values for securities in current assets, allocating undistributed profits to a restricted reserve.
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