2022 Budget Act

News No. 04/2022

The 2022 Budget Law, No. 234 of December 30, 2021, was published in the Official Gazzetta on December 31, 2021. It includes important new provisions regarding labor, families, and businesses.

Let's summarize the most important ones:

1. New IRPEF tax rates and methods for calculating tax deductions;

2. IRAP Updates;

3. Simplifications regarding the “Patent Box”;

4. Repeal of Decree-Law No. 157 of November 11, 2021;

5. Tax credits;

6. Exemptions and social security contribution reductions to promote stable employment, and pilot measures;

7. Reform of social safety nets;

8. Measures aimed at promoting corporate social responsibility and dialogue in the management of industrial crises;

9. Extracurricular internships;

10. Citizenship Income and LEPS for those who are not self-sufficient;

11. Social Ape.

With regard to other new developments (such as, for example: tax credits for renewable energy systems and composting facilities; subsidies for producers of DOP, IGP, and organic wines; the Sustainable Practices Fund, the Superbonus for the construction sector, the Facade Bonus and other construction tax deductions, urban regeneration initiatives, tax collection notices, the extension of the tax credit for capital assets, amendments to the regulations on revaluation and realignment, the postponement of the effective date of VAT provisions, reduced IMU for non-resident pensioners, and much more), please refer to the text of the Law for anything not expressly indicated in this News.

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1. New IRPEF tax rates and calculation of tax deductions

The following amendments are made to the Consolidated Income Tax Law, No. 917 of December 22, 1986:

The gross tax is calculated by applying the following tax rates, based on income brackets, to total income, net of deductible expenses:

1. Up to 15,000 euros, 23%;

2. Over 15,000 euros and up to 28,000 euros, 25%;

3. Over 28,000 euros and up to 50,000 euros, 35%;

4. Over 50,000 euros, 43%.

Therefore, the main change concerns the tax rates to be applied to the respective income brackets, which are being reduced from 5 to 4.

The calculation of tax deductions is changing; as of January 1, 2022, it will be carried out as follows, according to the summary table below:

a) Deductions for income from employment and similar sources (as provided for in the new Article 13 of the TUIR) (summary table)

Annual deduction (in euros)	Annual income limit (in euros)
1.880	Up to 15,000 (the amount of the deduction due cannot be less than 690 euros, or 1,380 euros if the contract is for a fixed term)
1,910 + ((1,190 * (28,000 - RC) / 13,000))	Over 15,000 to 28,000
1,910 * (50,000 - RC) / 22,000	Over 28,000 to 50,000
0	Over 50,000
Tax deduction due + 65 euros	Greater than 25,000 but less than 35,000

b) New deduction for pension income (Art. 13, para. 3, subparagraphs a), b), and c) of the TUIR)

Annual deduction (in euros)	Annual income limit (in euros)
1.955	For income up to 8,500 (the amount of the deduction cannot be less than 713 euros)
700 + ((1,255 * (28,000 - RC) / 19,500))	Over 8,500, but not 28,000
700 * (50,000 - RC) / 22,000	Over 28,000 to 50,000
0	Over 50,000
Tax deduction due + 50 euros	Greater than 25,000 but not greater than 29,000

c) New deduction for income treated as employment income and other income (Art. 13, paragraph 5, letters a) and b), if the total income includes one or more types of income referred to in Article 50, paragraph 1, letters e) (compensation for intramural freelance professional activities by National Health Service employees, etc.) and f) (allowances, attendance fees, and other compensation paid by the State, regions, provinces, and municipalities for the performance of public functions, etc.), g) (allowances received by members of Parliament, etc.), h) (life annuities and fixed-term annuities established for consideration other than those serving a social security purpose), and i) (other periodic payments), excluding those arising from the periodic payments listed in Article 10, paragraph 1, letter c), among deductible expenses, and Articles 53, 66, and 67, paragraph 1, letters i) and l)

Annual deduction (in euros)	Annual income limit (in euros)
​1.265	​Up to 5,500
​ 500 + ((765*(28,000 - RC)/22,500))	Over 5,500 to 28,000
500* (50,000 - RC)/22,000	​ Over 28,000 to 50,000
0
Over 50,000 Tax deduction due + 50 euros	Greater than 11,000 but not greater than 17,000

d) Tax deductions for dependents

The reform regarding tax deductions for dependent family members is governed by Legislative Decree No. 230 of December 21, 2021, which introduced the Universal Child Allowance as a form of support for families with dependent minor children and, under certain conditions, for adult children up to the age of 21. The payment of the allowance, which will begin on March 1, 2022, will result in the elimination of household allowances and deductions for dependent children from pay stubs, as they will be replaced by the Universal Child Allowance, which will be paid directly by INPS.

Both the “Assegno Ponte” and the tax deductions for the aforementioned dependents will continue to appear on pay stubs through February 28, 2022. Effective March 1:

• Tax deductions for dependent children aged 21 or older will remain in effect;

• No additional deduction (in the amount of 400 euros) will be granted for each child with a disability as defined by Law No. 104/1992, nor for those who have more than three dependent children (an increase of 200 euros for each child, starting with the first);

• The additional deduction for households with at least four dependent children will be eliminated.

• Please refer to our " News " on the Universal Child Allowance for further details.

e) Supplementary Tax Treatment

With regard to the supplementary allowance for income from employment and similar sources provided for—pending a review of income support measures—by Decree-Law No. 3 of February 5, 2020, converted with amendments into Law No. 21 of April 2, 2020, is granted for income up to 15,000 euros (provided that the gross tax, calculated in accordance with the provisions of the law and with the applicable exclusions, exceeds the amount of the deduction due pursuant to Article 13, paragraph 1, of the TUIR).

The supplemental benefit is granted even if the total income is greater than 15,000 euros but not greater than 28,000 euros, provided that the sum of the deductions referred to in Articles 12 and 13(1), the deductions referred to in Article 15(1)(a) and (b) and (1-ter) of the TUIR, limited to expenses incurred in connection with loans or mortgages taken out through December 31, 2021, and the installments relating to the deductions referred to in Article 15, paragraph 1, letter c), and Article 16-bis of the TUIR, as well as those relating to deductions provided for by other regulatory provisions, for expenses incurred up to December 31, 2021, do not exceeding the gross tax.

The supplementary deduction is recognized for an amount not exceeding 1,200 euros, calculated as the difference between the sum of the deductions listed above and the gross tax.

By way of example, here is a list of the deductions to be taken into account for the purposes of the calculation:

• Tax deductions for dependents (limited to those that remain in effect);

• Deductions for income from employment and similar sources;

• “for interest expense and related charges paid in connection with agricultural loans or mortgages (limited to charges incurred in connection with loans or mortgages taken out on or before December 31, 2021);”

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