Giorgetti presents the budget plan: flat tax for young people and a crackdown on bonuses

Economy Minister Giancarlo Giorgetti outlined the initial guidelines for the upcoming Budget Law, focusing on selective tax cuts and a review of bonuses. The most significant proposal involves introducing a 5% flat tax on salary increases for young workers under 35, a measure that would also require collaboration from employers.

Simultaneously, the government plans a "sort of inventory" of the numerous existing incentives, to avoid overlaps and ensure more targeted support for the middle class. Also under consideration is the possibility of restoring the energy efficiency deduction for primary homes (Ecobonus) to 65%, along with a one-time 100-euro fuel bonus. The majority, particularly the League, is also pushing to raise the threshold for accessing the flat-rate tax regime from 85,000 to 100,000 euros.

The debate on the upcoming Budget Law unfolds against a backdrop of fiscal pressure on the middle class and a proliferation of public bonuses in recent years. The flat-rate tax regime, a 5% flat tax for professionals and the self-employed, was introduced to simplify the system and encourage new business ventures. Its popularity has grown rapidly: in the first half of 2026, 53% of new VAT registrations opted for this regime, surpassing 2 million taxpayers by 2024.

However, the latest threshold increase, from €65,000 to €85,000 in 2023, resulted in a larger-than-expected revenue shortfall for the state, estimated at around €495 million in 2024. Now, the proposal to further raise the limit to €100,000 faces two main obstacles: the constraints of European VAT exemption regulations, which set the ceiling at €85,000, and the risk of exacerbating distortive effects, such as delaying invoicing to avoid exceeding the threshold or businesses' reluctance to grow. The maneuver thus hinges on a delicate balance between reducing the tax burden, maintaining public debt sustainability, and rationalizing incentives.