Budget law 2023: the government cuts the tax wedge.
The 2023 budget law provides for a first cut in the tax wedge, here’s what the government will do.
From the 2023 budget law, taxes on salary will decrease, net increase of the employee. This is what both businesses and workers aspire to at a time when high inflation is driving up electricity and gas bills. The Meloni government has already implemented the reductions in the tax wedge envisaged by Draghi in the first version of the maneuver proposal.
The changes seek to increase the reduction in the tax wedge (this term refers to the total amount of taxes and payments on the job, i.e. amounts withheld by the employee as well as payments paid by companies) by an additional one percentage point. The measure is still intended for beneficiaries living below the poverty line.
The 2 percent tax cut proposed by the Draghi government last year is now in effect. This year’s provision applies to incomes up to a maximum of 35,000 euros. The text of the budget law confirms a 2 percent cut, but measures will be taken to increase the number of beneficiaries. The government’s intention is above all to protect the smallest annual incomes, up to 20,000 euros, by adding a percentage point to the cut in the tax wedge. However, for annual incomes of up to €35,000, the wedge cut remains at 2 percent.
With the presentation of the amendments to the budget proposal, the limit of 20,000 euros will rise to 25,000. Like this:
- 25 thousand euros the reduction of the Irpef wedge is 3%;
- Between 25 mils and 35 mils, the wedge cut remains at 2%.