The 2026 Budget Law – Law No. 199 of 30 December 2025 – introduces a comprehensive set of measures that significantly affect the taxation of individuals, businesses, and real estate assets. The legislator has pursued a dual objective: on the one hand, to lighten the tax burden for certain categories of taxpayers; on the other, to rebalance the redistributive effects of these measures through selective interventions on tax deductions and relief regimes. In this context, the new Budget Law plays a central role in the tax planning of SMEs, large corporate groups, and high-net-worth individuals. It requires a review of income and asset strategies as early as the 2026 tax year.
Particular attention should be given to the changes to IRPEF (personal income tax) rates, which are accompanied by an adjustment of deductions for high-income taxpayers, as well as measures to incentivise corporate welfare and employee profit-sharing. At the same time, the rules on short-term rentals are being thoroughly revised, with a strengthening of the presumption of entrepreneurial activity, directly impacting property owners. Law No. 199 of 30 December 2025 also confirms the framework for building-related tax incentives, although these are now set on a path of gradual reduction in rates, in line with the need to contain public expenditure.
In this scenario, a systematic analysis of the main new provisions is essential to correctly assess the fiscal impact of economic and asset-related decisions to be taken during 2026.
CONTENTS
- Reduction of the IRPEF rate for the second income bracket and practical implications
- Reduction of IRPEF deductions for high incomes and redistributive neutrality
- Performance bonuses, profit-sharing, and corporate welfare
- Electronic meal vouchers and new exemption thresholds
- Short-term rentals and strengthening of the presumption of entrepreneurial activity
- Building bonuses, “ecobonus”, “sismabonus” (bonuses for earthquakes), and furniture bonus in 2026
1. REDUCTION OF THE IRPEF RATE FOR THE SECOND INCOME BRACKET AND PRACTICAL IMPLICATIONS ↑
One of the most significant measures of the 2026 Budget Law concerns the reduction of the IRPEF rate applicable to the second band of taxable income. The rate is reduced from 35% to 33% for incomes between €28,000 and €50,000, resulting in an overall revision of the structure of personal income tax. The new income brackets are therefore as follows:
- 23% up to €28,000,
- 33% for the intermediate band,
- 43% for incomes above €50,000.
The maximum tax benefit from the rate reduction is quantified at €440 per year, calculated by applying the 2% reduction to the entire amount of the second bracket. This measure will be fully operational from 1 January 2026 and will first be reflected in the 2027 tax returns. However, the law provides for the immediate application of the new rate in payroll withholding for employees and similar income, starting from January 2026 salaries and pensions, with any adjustments in subsequent months.
For businesses and withholding agents, this requires prompt updating of payroll and withholding management systems, while for taxpayers, it opens a phase of evaluating the actual tax saving in relation to the overall structure of available deductions.
2. REDUCTION OF IRPEF DEDUCTIONS FOR HIGH INCOMES AND REDISTRIBUTIVE NEUTRALITY ↑
Alongside the reduction in the IRPEF rate, the new Budget Law introduces a compensatory measure aimed at taxpayers with total income exceeding €200,000. From the 2026 tax year, there will be a flat-rate reduction of €440 in IRPEF deductions available for specific categories of expenses, with the declared aim of neutralising the benefit arising from the reduction of the second bracket rate.
The reduction applies to the 19% deductions provided for by the TUIR (Consolidated Income Tax Act) and other tax provisions, excluding healthcare expenses, as well as deductions for donations to political parties and insurance premiums against catastrophic events. This intervention is designed to rebalance the system, aiming to prevent the reduction in the IRPEF rate from having regressive effects in favour of those with greater tax capacity.
For HNWI (High Net Worth Individuals), the 2026 Budget Law therefore requires careful analysis of the composition of available deductions, in order to assess the overall impact of the reduction and possible alternative tax planning strategies, including the allocation of deductible expenses.
3. PERFORMANCE BONUSES, PROFIT-SHARING, AND CORPORATE WELFARE ↑
The Budget Law significantly strengthens the preferential regime for performance bonuses and sums paid as profit-sharing. For the years 2026 and 2027, the substitute tax rate is reduced from 5% to 1%, up to a limit of €5,000 per year. This is a strong incentive for second-level bargaining and the spread of remuneration models focused on productivity and employee engagement.
The legislation also confirms, for 2026, the relief on dividends from shares allocated in place of performance bonuses, providing for a 50% exemption on amounts up to a maximum of €1,500 per year. In this area, the law forms part of a broader strategy to promote corporate welfare, offering businesses efficient tax tools for staff retention and sharing in economic results.
From an operational perspective, it is essential to verify compliance with the subjective and objective requirements set out in the regulations, as well as the interaction with other welfare instruments, in order to maximise tax benefits without incurring challenges.
4. ELECTRONIC MEAL VOUCHERS AND NEW EXEMPTION THRESHOLDS ↑
Another measure concerns the increase in the exemption threshold for electronic meal vouchers, which rises from €8 to €10 per day. The threshold for paper meal vouchers remains unchanged at €4. This measure is in line with policies to promote digital corporate welfare tools, favouring more traceable and efficient solutions.
For businesses, the increase in the exemption threshold represents an opportunity to review supplementary remuneration policies, increasing the value of the benefit without additional social security or tax costs. For employees, the benefit translates into an increase in net purchasing power, consistent with the redistributive objectives of the law.
5. SHORT-TERM RENTALS AND STRENGTHENING OF THE PRESUMPTION OF ENTREPRENEURIAL ACTIVITY ↑
The rules on short-term rentals undergo a structural revision. From the 2026 tax year, the threshold for properties that can be let under the short-term rental regime without a presumption of entrepreneurial activity is reduced to two units. From the third property onwards, the activity is automatically classified as entrepreneurial, with the consequent obligation to open a VAT position, register for social security, and apply the rules on business income.
The rates for the flat-rate tax (“cedolare secca”) formally remain unchanged, but the new regulatory framework significantly narrows the scope of the preferential regime. The 2026 Budget Law also clarifies that, for the purposes of calculation, only short-term rental contracts are relevant, and that multiple contracts relating to rooms in the same flat count as a single property unit.
For property owners and investors, this change requires a reassessment of asset management strategies, also in light of the VAT and social security implications associated with entrepreneurial classification.
6. BUILDING BONUSES, “ECOBONUS”, “SISMABONUS” (BONUSES FOR EARTHQUAKES), AND FURNITURE BONUS IN 2026 ↑
Law No. 199 of 30 December 2025 confirms the framework for building-related tax incentives, extending to 2026 the rates already in force for 2025. The home renovation bonus therefore remains set at 36% for expenses incurred up to 31 December 2026, with an increased rate of 50% for works on the main residence, up to a limit of €96,000 per property unit. From 2027, a progressive reduction in the rates is planned.
The “ecobonus” and “sismabonus” are aligned with the home renovation bonus, with differences between main residences and other properties. The extension of the furniture bonus for 2026 is also confirmed, with a 50% deduction on a maximum expenditure of €5,000, provided that the building works commenced from 2025.
Overall, the 2026 Budget Law provides continuity for building incentives but requires careful planning of expenditure timing and the methods of utilising deductions, especially from a medium- to long-term perspective.
