The government’s main intervention in tax matters concerns the revision of Irpef rates: how much will be cut and for whom?

The decision was made with the 2023 budget law containing the measures for 2024 and concerns millions of workers and pensioners. We are talking about the revision of Irpef rates, an important intervention as it provides for a real reduction of the brackets which will go from four to three and with them the percentages relating to taxation.

Irpef rate cut, what is the annual saving (Sjbeez)

In fact, the Irpef rates as we knew them started from 23% and reached, after the steps of 25 and 35%, up to 43% clearly on the basis of the annual income. With the 2024 Budget, everything changes as the first two rates (and the related income brackets) have been merged and this decision results in a significant tax cut which will affect a large number of taxpayers and pension recipients. Let’s see what the savings will be which will translate into a higher amount and who will benefit from it.

Review of Irpef rates, how much is the cut and for whom

Going into detail, the executive has defined, through the merging of two percentages into a single rate of 23%, a saving of 2% on the Irpef to be paid for all incomes between 15 thousand and 28 thousand euros. These are precisely those who paid 25% of Irpef in 2023 and who will now find themselves in the lowest group of the rate. For those who slightly exceed the threshold of 15 thousand euros, they will not find themselves with particularly high savings.

Irpef, which incomes benefit from the rate cut (Sjbeez)

To give an example, a gross income of 16 thousand euros will lead to a benefit in terms of additional amounts of only 20 euros in one year. As income increases, however, savings will increase and, therefore, the sum paid will increase. Those who earn around 28 thousand euros a year will therefore be able to enjoy the greatest benefit and will in fact save 260 euros in Irpef every year.

But the savings will be of interest, given that the rate system works incrementally, even to those with higher incomes, albeit up to a maximum threshold of 50 thousand euros. In fact, between 28 and 50 thousand euros, 6,440 euros will be paid to which 35% of the portion of income exceeding 28 thousand euros will be added. Once this ‘limit’ income amount has been exceeded, the government has provided for a cut in deductions equal to 260 euros: in this way the gain linked to the reduction in rates will effectively be eliminated.