Preferential taxation of 15% on overtime and holidays, 5% rate for salary increases in 2026 for incomes up to 28 thousand euros. Increases in excise duties on cigarettes, rebalancing of those on diesel and petrol, increase in flat rate tax on short-term rentals to 26%. Decline to 26% of the tax rate on income and sale of electronic money tokens. And then tax breaks for hiring working mothers, increasing the age of parental leave for children up to 14 years old. First home outside the ISEE calculation up to the threshold of 91,500 euros. These are some of the main innovations of the budget law, according to the first draft of the text approved in the Council of Ministers last Friday.
The document, structured in 137 articles (the draft of the maneuver) contains all the main measures that have animated the political debate in the last two months, will be sent to Parliament in the next few days. Meanwhile, the debate on the content of the measure continues: there is an open dialogue between the government and credit institutions to refine the measures which provide for a contribution from the banks of 11 billion in the coming years. Furthermore, the government is discussing cuts to ministries, 7 billion in the next 3 years, which would have dissatisfied several ministries, now looking for a possible rebalancing of resources.
So here is the key measure in the text: the cut in Irpef for the middle class with the rate from 35% to 33%, and the remodulation of deductions above 200 thousand euros. There is also room for the flat tax raised to 300 thousand euros for ‘scrooges’ returning to Italy from abroad. There is the contribution of the banks. The partial sterilization of the retirement age linked to the growth in life expectancy, with the increase by one month starting from 1 January 2027. Minimum pensions will instead increase by 20 euros per month, 260 in a year. The refinancing of the card dedicated to you for the purchase of essential food items. The tax relief on electronic meal vouchers of up to 10 euros, instead of the current 8. A 20 million fund for housing support for separated parents.
The details of the new scrapping emerge: 54 bimonthly installments over 9 years, minimum of 100 euros, with acceptance by April next year and first payment from July 2026.
Below are the details of some of the main measures contained in the text.
RELIEF IN HIRING MOMS, LEAVE UP TO 14 YEARS. Reductions are arriving for those who hire mothers, with benefits starting from 1 January 2026. In particular, private employers who hire women, mothers of at least 3 children under the age of eighteen, without a regularly paid job for at least six months, «are granted exemption from the payment of social security contributions paid by the employer, to the extent of 100%, up to the maximum amount of 8,000 euros per year, re-measured and applied on a monthly basis, with the exclusion of premiums and contributions due to INAIL”.
Longer parental leave is coming. Now the parent can abstain from work until the child turns 12 for three months, non-transferable, being able to count on an allowance equal to 30% of the salary. This limit is now raised to 14 years. Not only that, but now parents, alternatively, have the right to abstain from work, within the limit of five working days per year, for the illnesses of each child between the ages of 3 and 8: the working days per year increase to 10, while the age limit of the child is set at 14 years.
LEP IMPLEMENTATION ON SCHOLARSHIPS. In the field of education, within the essential levels of performance, the state supplementary fund for the granting of scholarships is increased by 250 million euros per year starting from 2026.
26% TAXATION ON CRYPTOCURRENCIES. Income accrued through the holding, transfer or use of electronic money tokens will be taxed “at a rate of 26 percent, instead of the ordinary rate of 33 percent”. Euro-denominated electronic money tokens are those “whose value is permanently pegged to the euro and whose reserve funds are held entirely in euro-denominated assets with authorized entities in the European Union”.
CIGARETTE COST INCREASE. A mini ‘dread for smokers is coming. For cigarettes, for example, excise duties go from around 30 euros per 1,000 units to 32 euros for 2026, to 35.50 for 2027 and to 38.50 for 2028. The increases concern both excise duties on manufactured tobacco and the excise tax “on substitute products for smoking products”.
IRPEF CUT FOR THE MIDDLE CLASS. The second Irpef rate drops from “35 percent” to “33 percent”. For taxpayers with a total income exceeding 200,000 euros, the amount of the deduction due is decreased by an amount equal to 440 euros.
TAX RELIEF FOR CONTRACTS, OVERTIME AND HOLIDAYS. For 2026, the sums paid, within the annual limit of 1,500 euros, to employees by way of: increases and allowances for night work, performed on public holidays and on weekly rest days are subject to a substitute tax of 15 percent; shift allowance and other work-related emoluments. They are applied in the private sector to holders of employee income of an amount not exceeding, in 2025, 40,000 euros.
Salary increases paid to private sector employees in 2026, implementing contractual renewals signed in 2025 and 2026, are subject to a substitute tax of 5 percent.
RETIREMENT AGE GOES UP, 20 EUROS MORE THE MINIMUM. The increase in the requirements for access to the pension system from 1 January 2027 is applied for a period of one month. From 1 January 2026, the monthly amount of pensions for people in disadvantaged conditions will be increased by 20 euros per month and 260 euros per year.
FIRST HOME OUTSIDE ISEE CALCULATION. The first home deductible threshold for ISEE purposes and the equivalence scale is raised to 91,500 euros, increased by 2,500 euros for each cohabiting child following the first. The increases are redetermined at 0.1 in the case of families with two children, 0.25 in the case of three children, 0.40 in the case of four children and 0.55 in the case of at least five children.
SCRAPPING FIFTEEN. The payment of the sums resulting from the tax burdens from 1 January 2000 to 31 December 2023 – deriving from the failure to pay taxes or social security contributions – is made in a single solution, by 31 July 2026, or in the maximum number of fifty-four bimonthly installments of the same amount. The debtor expresses the desire to proceed with the definition by 30 April 2026. The overall amount of the sums, as well as that of the individual installments, cannot be less than one hundred euros.
The installment payment plan deadlines: the first, second and third, respectively, 31 July 2026, 30 September 2026 and 30 November 2026; from the fourth to the fifty-first, respectively, on 31 January, 31 March, 31 May, 31 July, 30 September and 30 November of each year starting from 2027; from the fifty-second to the fifty-fourth, respectively, on January 31, 2035, March 31, 2035 and May 31, 2035.
BANKS CONTRIBUTION. The rate of the substitute tax on reserves not distributed by credit institutions “is established at 27.5 percent for the release” of those existing at the end of the current financial year as of 31 December 2025 and “33 percent for the release of existing reserves at the end of the following financial year”.
For the tax period following the one in progress on 31 December 2025 and the two subsequent ones, “the IRAP rates for credit institutions and insurance companies are increased by two percentage points”.
DRY COUPON FOR SHORT RENTALS AT 26%. The dry tax rate on short-term rentals increases to 26%. Until now it was 21% on the first property used for short-term rentals, and 26% on other properties.