Giorgetti proposes a flat tax on salary increases for young people

Minister of Economy Giancarlo Giorgetti has presented a proposal to introduce a flat tax on salary increases granted to young workers. The idea envisages that companies which increase the paychecks of their younger employees could benefit from a lighter substitute taxation on the additional portion of their compensation.

The mechanism would be similar to the one already tested with the 2026 Budget Law, which provided for a reduced tax rate of 5% for certain sums related to contract renewals. In this case, however, the tax relief would specifically concern salary increases granted by companies to young people. Many crucial aspects remain to be defined, including the precise tax rate, income ceilings, and the criteria for accessing the benefit.

The proposal is part of the debate for the next 2027 Budget Law and aims to counter the difficulty young people face in reaching adequate salary levels. In parallel, Giorgetti has also reopened the issue of raising the flat tax threshold for self-employed individuals to 100,000 euros, currently set at 85,000.

Minister Giorgetti's proposal stems from a long-standing issue: the difficulty young people face in obtaining adequate wages when entering the Italian job market. This phenomenon, which contributes to brain drain and the erosion of purchasing power, has previously been addressed with partial measures, such as the flat tax for VAT-registered freelancers and some self-employed workers.

The direct precedent Giorgetti refers to is the 2026 Budget Law, which introduced a reduced tax rate of 5% on amounts related to national collective bargaining renewals. That mechanism is now being reconsidered to apply it not only to collective bargaining but also to salary increases granted directly by companies to young employees. The stated goal is to create a tax incentive that encourages businesses to better remunerate young workers.

The proposal is part of the broader debate on the flat tax, long advocated by the League, which would like to extend the preferential regime by also raising the threshold for VAT-registered freelancers. However, to become a reality, the measure will have to overcome European constraints and establish a precise definition of beneficiaries, amounts, and access conditions through negotiations in the upcoming Budget Law.