With circular no. 2/E/2024, the Italian Revenue Agency clarified the implementation of Italian Legislative Decree of 30 December 2023, no. 216, i.e. the decree implementing the first phase of Italian personal income tax (imposte sul reddito delle persone fisiche, ‘IRPEF’) reform and other measures on income taxes.
Reform of the tax brackets
The Legislative Decree in question implements certain principles and directive criteria of Italian Law of 9 August 2023, no. 111, entitled “Delegation to the Government for tax reform”.
Article 1, paragraph 1 of the decree introduces significant changes in the field of personal income tax and, for the 2024 tax period only, applies new rates and income brackets for determining gross tax.
With respect to the framework contained in Article 11, paragraph 1, of Italian Presidential Decree no. 917/1986 (the Italian Income Tax Consolidation Act – Testo unico delle imposte sui redditi, ‘TUIR’), there is therefore a reduction from four to three income brackets and the corresponding rates; in particular, for 2024, the gross tax is calculated by applying the following rates:
Tax deductions and allowance
Moreover, for the year 2024, the deduction provided for by Article 13, paragraph 1, letter a) of TUIR has been raised from EUR 1,880 to EUR 1,955 for the recipients of employment income with the exclusion of pensions and/or similar allowances – referred to in Article 49, paragraph 1, of the TUIR – and certain assimilated income if its total value does not exceed EUR 15,000.
This provision, set out in paragraph 2 of the same Article 1, therefore increases the amount of income excluded from taxation (the “no tax area”) to EUR 8,500 for recipients of employment and assimilated income, bringing it into line with the provisions already in force for pensioners.
In this regard, the Italian Revenue Agency clarified that the amendment concerns only the first sentence of Article 13, paragraph 1, letter a) of the TUIR, and therefore the other provisions governed by the same article remains unaffected.
Article 1, paragraph 3, of the Decree amends, for the 2024 tax year, the prerequisite for the granting of allowance under Article 1, paragraph 1, of Italian Decree-Law no. 3/2020. It is provided that, for taxpayers with a total income of no more than EUR 15,000, the relief is granted on the condition that the gross tax is higher than any deduction due minus EUR 75 in relation to the period of work in the year.
Important changes have also been introduced for taxpayers with a total income of more than EUR 50,000, with respect to which Article 2 of the Decree provides for the reduction of EUR 260 in the amount of the deduction from the gross tax due for the year 2024.