New favourable Budget law for 2022 amendments and favourable implications for individuals

The Italian lawmaker has introduced, by the Budget Law for the fiscal year 2022, significant changes in respect to the marginal tax brackets applicable to individual taxpayers. The changes made for 2022 mean the income brackets have been remodelled and personal income tax rates are now reduced from five to four.

This amendment will have a strong impact on medium income, with the most favourable consequence in terms of the tax burden. The changes made to Article 11 of the Tuir can be summarized as follows:

the removal of the 41% rate applied to the income bracket from 50 to 75 thousand euros;
the second rate for the bracket from 15 to 28 thousand euros is lowered from 27% to 25%;
the third rate is reduced from 38 to 35% for incomes up to 50,000 euros (while the rate limit of 38% in 2021 was set at 55,000 euros);
income above 50,000 euros is taxed at 43%

Old and new brackets

The above law change will have an implication, in terms of a major enhancement, also for the favourable tax reliefs (i.e. inpatriates tax regime – art. 16, D.l.gs. n. 147/2015) providing a tax exemption of the 70% of the employment income.

This means that from the fiscal year 2022 an individual intending to move to Italy may benefit from a lower tax rate, in addition to the strong tax-saving arising from the tax relief already in place.

Gianluca Marini
gianluca.marini@bdo.it