Lucrezia Ciotti The new 2027 Budget Law reshapes the tax and social security framework, introducing changes that will have direct consequences for retirees , workers, and families. Among the most significant changes is the tightening of the revaluation of medium- to high-income pensions, which will no longer benefit from full inflation adjustment. But that's not the only change: from income tax cuts to new hiring incentives, to tax changes for the self-employed and businesses, here's what the measure entails and who could gain or lose.
2027 Budget: Income Tax Cuts of Up to €55 and New Taxes: What's New?
Among the key measures is the extension of the personal income tax cut to incomes up to €55. For 2027 alone, the second bracket rate will increase from 35% to 33%, affecting approximately 3,2 million taxpayers. The savings will vary based on income: for those with a taxable income of €52, it is estimated at around €200, while for those with a taxable income of €55 or more, it can reach a maximum of €500 per year.
The flat tax for self-employed workers with revenues up to €100 has also been confirmed, with VAT applied above the €85 threshold. To encourage hiring , businesses will also be able to benefit from increased tax deductions : 140% of personnel costs for those under 36 and 180% for working mothers.
A tax break is also available for younger private sector employees , born after 1998 and with earnings not exceeding 28 euros: salary increases of up to 2.500 euros will be taxed at a rate of 1%.
Among the new measures is a state contribution for newborns : starting in 2027, €100 will be credited annually until the child reaches 18, with family members able to add additional amounts. Financial institutions are expected to receive an overall contribution estimated at €5,8 billion in 2027. Taxation for those transferring their tax residence abroad is also changing : the new exit tax may affect capital gains accrued on financial investments, even if not yet collected, when the assets involved reach at least €800 and specific residency requirements are met. On the consumption front, a tax increase on cigarettes is expected , while the implementation of the plastic and sugar taxes is further postponed. Finally, the budget confirms additional resources for healthcare, a fund for seniors' cards, and the refinancing of incentives for young people planning to purchase their first home.
2027 Budget: from a one-year income tax cut to a pension slashing.
The 2027 Budget Law introduces a change to the pension revaluation system, reducing the inflation adjustment for medium-to-high pensions. Full coverage of the increases will be guaranteed only for pensions that do not exceed four times the INPS minimum, a threshold that in 2027 will correspond to approximately €2.447 gross per month . Beyond this limit, the cost-of-living adjustment will be partial and will progressively decrease as the pension amount increases. Specifically, the revaluation will be recognized at 85% for pensions between four and five times the minimum, 53% for those between five and six times, 47% for those between six and eight times, and 37% for those between eight and ten times.
For even higher pensions, the percentage will drop to 32% . The cut will affect the entire pension amount, not just the portion exceeding the established threshold. The consequences could be significant: assuming 3% inflation, someone receiving €4.000 gross per month would receive an increase of €56,40, compared to the €120 they would receive with the full revaluation.
Some prospects for early retirement are also changing . €850 million per year has been allocated for the period 2027-2029, while the extension of the social retirement benefit (Ape sociale) has been confirmed, also intended for the unemployed, caregivers, and workers employed in arduous tasks in 2027. However, the League's proposal to allow retirement at 64 with 36 years of contributions has not yet become a concrete measure. There are also changes for public employees : the time to obtain the severance pay (TFS) will be progressively shortened, from nine to six months in 2028 and to three months from 2029.