New Irpef, the simulation: here are the figures for each income bracket with the new rate.
The benefit of the new Irpef curve designed by the government for 2024 will reach up to 260 euros a year for workers and pensioners with an average income. A discount that will be worth up to 50,000 euros, because as soon as this threshold is exceeded, a cut in tax deductions of 260 euros will be triggered which will effectively completely absorb the advantage, which will thus remain concentrated only on low incomes. Here, in a simulation, what happens for each income bracket with the arrival of the new rate, the cut in deductions above 50,000 euros and the increase for employees in the no tax area to 8,500 euros, as for pensioners.
– 15,000 euros
The Irpef cut comes only for employees who see the no tax area threshold increased: they paid 370 euros which in 2024 will become 295, with a saving of 75 euros. For the others – pensioners and self-employed – the rate was and remains at 23% and there are no reductions. It must be said that in this income bracket, employees also benefit from the 7% tax wedge cut and that pensioners have their pensions revalued in line with inflation.
The taxes to be paid go up, but so does the discount. The impact of the reduction in the rate from 25 to 23% can be seen in this range. The effective discount becomes 200 euros. Employees who pay 3,769 euros in taxes in 2023 will pay 3,565. The self-employed go from 5,348 to 5,148 and pensioners, who still at this level see their pension revalued 100% for inflation, pay 5,057 this year and go to 4,857.
For employees there is no longer a wedge cut, but on the Irpef the profit is 260 euros. The same goes for pensioners and self-employed people. On pensions, the recovery of inflation, at this income threshold, will only partially occur.
Even for those who earn this amount, they will still have a relief of 260 euros. But be careful, from 50,001 euros – reading the text of the government provision – the 19% deductions but also the higher ones for non-profit organizations and parties are reduced by a similar amount: in practice the tax benefit is eliminated.
The Irpef maneuver will always have a benefit of 260 euros due to the intersection of rates and deductions. But then if there are deductions these will have to be sterilized for the first 260 euros, effectively canceling the benefit. For taxpayers of all three categories (employees, pensioners and self-employed) the taxes to be paid, which are now equal to 20,850 euros and which could fall to 20,590 euros but this will not be the case if the deductions are reduced.
Wedge cut confirmed for 2024
Confirmation of wedge cut also for 2024. Start of new Irpef at three rates with the merging of the first two brackets. But also one cut to deductions for incomes above 50 thousand euros, which from this threshold onwards reduces any benefits. They mainly look at help low-to-middle income earners the main tax interventions launched by the government with the maneuver and legislative decrees that launch the tax reform. The most substantial provision of the budget law is the wedge cut. It is worth 10 billion, covered entirely in deficit, and extends to the whole of 2024 the measure already in force since last July: cut of 6 points for incomes up to 35 thousand euros and 7 for those up to 25 thousand.
Interventions in favor of medium-low incomes
An intervention to give «more money in the paycheck for medium-low incomes»underlines the prime minister Giorgia Meloniexplaining that the measure translates into an average increase of «around 100 euros a month for an audience of around 14 million citizens». The start of the operation is added to the intervention on the wedge Irpef reform, with the merging of the first two income brackets, which modifies the current 4-rate system (up to 15 thousand at 23%; between 15 and 28 thousand at 25%; between 28 and 50 thousand at 35% and over 50 thousand euros per 43%). In 2024 there will be only three income brackets, with the elimination of the 25% rate and the consolidation of incomes up to 28 thousand euros at 23%.
A change that involves overall over 24.9 million taxpayers and costs over 4 billion. The combined effect of the reduction of the wedge and the new Irpef rate, estimates the Ministry of Economy, will strengthen the paychecks of employees up to 1,298 euros per year (for 27,500 euros gross per year). But to concentrate the Irpef benefit on medium-low incomes, the government has decided to «sterilize it» for higher incomes.
Measures for incomes above 50 thousand euros
In fact, for those who declare more than 50 thousand euros, one arrives exemption on tax deductions. A reduction of 260 euros from the deduction due to be applied on 19% discounts, on donations to non-profit organisations, parties and the third sector as well as deductions on premiums for disaster insurance. «We must safeguard the medium-lower segments»explained the Deputy Minister of Economy Maurizio Leo: and since «as a result of the mechanism of remodulation of the first bracket, even subjects with higher incomes would have benefited»it was decided to put «a cap on deductibility». The legislative decree that reforms the Irpef also includes the expansion of the no tax area: the threshold for income from employment is raised up to 8,500 euros. And therefore equal to that already in force for pensioners.