2026 Budget: income tax cut, support for families and businesses, more funds for healthcare and pensions

Green light expected on Friday, October 17: the budget totals 18 billion euros. Measures include wage boosts, parental leave, super depreciation, and home renovation bonuses. Plastic and sugar taxes postponed.

The new financial budget, presented by Economy Minister Giancarlo Giorgetti and scheduled for approval by the Council of Ministers on Friday, October 17, totals 18 billion euros. The focus is on support for families and businesses, income tax cuts for the middle class, and increased funding for healthcare and pensions. Here are the main highlights.

Wages and Families: About 2 billion euros will be allocated in 2026 to adjust wages to the cost of living, aiming to support purchasing power. For families, the government plans 3.5 billion over three years, including a revision of the ISEE (means testing). The package confirms the optional parental leave paid at 80% for three months and introduces a “pension credit” for newborns—state support for future retirement benefits.

Taxes and Income Tax (Irpef): A key measure is the reduction of the second income tax bracket from 35% to 33%. This cut targets incomes between €28,000 and €50,000, with a maximum annual saving of €440. The total cost is 9 billion euros over three years. The ISEE calculation rules will also be revised, affecting home values and equivalence scales, with an annual impact of 500 million euros.

Support for Businesses: The super depreciation incentive returns to encourage business investments, with 4 billion euros allocated. Tax credits for companies in the Special Economic Zones (ZES) and the refinancing of the “Nuova Sabatini” fund are also confirmed.

Plastic and Sugar Taxes Postponed: Plastic and sugar taxes will remain frozen throughout 2026, a move welcomed by producers.

Housing and Healthcare: Renovation bonuses are confirmed: 50% for primary residences and 36% for second homes. In healthcare, additional funds are added on top of previous allocations (5 billion in 2026), with 2.4 billion euros for 2026 and 2.65 billion for the following two years.

Pensions and Tax Amnesty: There is consideration of a selective freeze on the increase in retirement age scheduled from 2027, with a possible gradual rise of one month per year until 2029. Work is also ongoing on a new tax amnesty for 2023, with 108 installments over nine years proposed, excluding those who have never filed tax returns.

Funding: To finance the budget, the government expects an extraordinary contribution of 4.5 billion euros from banks and insurance companies, alongside spending cuts and a review of EU recovery plan (PNRR) funds.

This budget, though limited in resources, aims to balance growth and social support.