2026 Budget: Irpef cuts for 13 million taxpayers and an increase in minimum pensions

The 2026 budget law, transmitted to the Senate yesterday evening, Wednesday 22 October, after the green light from the Quirinale, introduces a series of tax and social security measures intended to impact the incomes of over 15 million Italians. From income tax cuts for the middle class to increases in minimum pensions, including incentives for workers and new rules on short-term rentals and tobacco., the stamped text and the technical report outline a complex picture of interventions spread across multiple fronts.

Irpef: cuts for the middle class

The reduction in the second IRPEF tax rate, from 35% to 33%, will affect incomes between 28 and 50 euros. The estimated average benefit is approximately €210 per year and will affect 13,6 million taxpayers, over 8 million of whom earn most of their income from employment. However, there is no benefit for those who exceed 200 euros, for whom the intervention will be neutralized.

Minimum pensions and social Ape

The maneuver also introduces a Increase in minimum pensions aimed not only at those over 70, but also at pensioners in financial difficulty. Overall, approximately 1,1 million people will be affected by the change, with a monthly increase of 20 euros starting from 2026, 12 euros more than in 2025. The social Ape has also been extended, which will be able to involve approximately 24 beneficiaries, while Quota 103 and the Women's Option have not been renewed.

Tax exemption on contracts and premiums 

A new plan is planned for the two-year period 2025-2026 tax rate reduced to 5% on contractual increases for workers with incomes below 28 euros, a measure that will affect 3,3 million employees. The Tax exemption for overtime, holidays, and night work up to an income of 40 euros. It drops from the current 5% to 1%.tax on performance bonuses, with the increase in the maximum ceiling from 3 to 5 euros. It also increases the Tax-free threshold for electronic meal vouchers, which increases from 8 to 10 euros.

Flat tax for wealthy new residents

The flat tax for the super-rich is changing., that is, those who own at least one million euros, who transfer their tax residence to Italy: the amount increases from 200 to 300 euros per year, while for family members it goes from 25 thousand to 50 thousand euros. The goal is to increase the revenue from the repatriation of large estates.

Funds for municipal employees

A new one has also been established 50 million fund for 2027 and 100 million starting from 2028 intended to increase the additional treatment of non-managerial employees of municipalities, long-awaited measure for rebalance wages in local public administration.

Tobacco and short-term rentals

From 2026 they will start progressive increases on cigarette packs: +15 cents in 2026, +25 in 2027 and +40 from 2028.
On the real estate front, the flat rate tax on short-term rentals remains at 21%. for those who rent directly or through online platforms, avoiding the increase to 26%. According to the technical report, 90% of landlords will continue to use digital portals, with an expected revenue of over 100 million per year from 2028. Furthermore, the possibility remains for the Municipalities to increase the tourist tax to up to 2 euros per night.

Regularization of tax bills

The new simplified definition allows for regularize tax debts incurred between 2020 and 2023Taxpayers will be able to choose between payment in a single solution or in 54 bimonthly installments (minimum 100 euros each) with interest at 4% per year. The overall impact on revenue is estimated to reach €9 billion between 2026 and 2036.