Legge di Bilancio 2025 – innovations in area of labour and social security

On 31 December 2024, Law No. 207 of 30 December 2024 was published in the Official Gazette, containing the State Budget for the financial year 2025 and multi-year budget for the three-year period 2025-2027 (hereinafter, the ‘Legge di Bilancio).

There are many changes that will have an impact on companies and their employees.

What changes in payroll?

The 6-7% contribution wedge will cease on 31 December 2024 and in its place, the new manoeuvre grants to employees with a total income of up to 20,000 euro a tax-free sum calculated by applying specific percentages to their wage income, determined according to the income bracket they belong to. To the employees with a total income between EUR 20,000 and EUR 40,000 are granted an additional deduction from the gross tax in relation to the period of employment and determined on the basis of the total income received.

A tightening of the deductions of gross tax from deductible expenses and charges has also been introduced. For employees with a total income exceeding EUR 75,000, the maximum deductible amount will be determined not only by the amount of income received but also by the number of dependent children.

The “Legge di Bilancio 2025” also modifies the deductions for dependent children, which will be available for children between 21 and 30 years of age, except in cases of ascertained disability. Finally, deductions for other dependent family members will be limited to ascendants cohabiting with the taxpayer.

Also confirmed is the reduction of IRPEF tax percentages and income brackets as for the year 2024. At the same time, the “no tax area” and the supplementary allowance (Trattamento integrative) in force in 2024 remain unchanged.

Finally, a stratum has been introduced in order to qualify for exempt reimbursements for board, lodging, travel and transport by means of non-scheduled public transport services (such as taxis and car rentals with driver). As of 2025, it will in fact be necessary for payments to be made with traceable payment systems (credit or debit cards, cheques and bank or postal transfers).

Advantageous novelties and confirmations in the field of welfare were also provided.

First of all, the exemption threshold for benefits in kind has been confirmed at EUR 1,000, raised to EUR 2,000 for employees with tax dependent children.  There are also new rules for determining the taxable value of newly registered cars granted by employers for mixed use with contracts entered into on or after January, 1st 2025. The “Legge di Bilancio” by introducing this measure favours the granting of electric cars.

For employees hired with an open-ended contract in 2025 who transfer their residence more than 100 km away from their previous one in order to carry out their new job, a two-year tax exemption has also been introduced within the overall limit of EUR 5,000 per year on the amounts paid or reimbursed by employers for the payment of rents and maintenance costs of rented buildings. The measure is aimed at employees with an employment income not higher than EUR 35,000 in 2024.

Finally, the reduced productivity bonus substitute tax (PDR) rate of 5% was confirmed for the years 2025, 2026 and 2027.

The “Legge di Bilancio 2025” then deals with measures in favour of employees with children.

In particular, the number of months of compensated Parental leave at 80% of salary has been further extended to three for those who will conclude their Maternity leave in 2025. For employees who concluded their Maternity leave in 2024, the second month at 60% in 2025 is increased to 80%.

The mothers’ bonus introduced in 2024 was also confirmed and extended to employees with fixed term contracts and self-employed women who meet certain requirements. The eligibility of working mothers with at least two children up to the age of the youngest child has been extended to 2025 – 2026.

The legislation also intervenes in favour of companies located in southern Italy

Replacing the “Decontribuzione Sud” that ended on 31 December 2024, the “Legge di Bilancio 2025” introduced two new contribution exemptions, one for micro, small and medium-sized enterprises by definition with fewer than 250 employees, and the other for enterprises not falling within this definition that hire permanent workers in the regions of southern Italy.

A further measure introduced in the area of contributions concerns the access requirements for Naspi

A new contribution requirement has been introduced to benefit from the unemployment benefit. Workers who voluntarily terminate an employment relationship will be eligible for NASPI – for involuntary loss of employment in the 12 months following the voluntary termination – if they have accrued 13 contribution weeks in their new job. This is subject to special cases identified in the legislation.

Focus on new pension measures

The first new measure concerns young workers who contribute into a compulsory social security systeme (such as the AGO, its substituted and exclusive forms and the “Gestione Separata”) for the first time in 2025 will be able to choose to increase their contribution amount by raising the IVS rate to a maximum of 2 percentage points.

It is then extended to employees who by 31 December 2025 meet the requirements for early retirement and opt to remain in service, the right to renounce the crediting of their own IVS contribution rate. In consideration of the exercise of this right, the employer will be exempted from paying the aforesaid percentage, no longer paid to the social security institution but paid entirely to the employee.

Lastly, the possibility is introduced for employees belonging to the contribution-based system to anticipate retirement through the accumulation of the compulsory social security with the complementary one, in order to reach the requirement of the monthly threshold amount that would otherwise not be met.