Italy’s parliament has passed a new budget for 2025, focusing on two main goals: meeting European Union demands to lower government deficits and keeping Prime Minister Giorgia Meloni’s promise to reduce taxes for families.
The budget, which is about 30 billion euros (around $31 billion), will mostly help low- and middle-income families by cutting taxes and social security fees. Italy’s total debt is nearly 3 trillion euros, one of the highest in the European Union, so they are trying to balance their spending carefully.
Meloni’s government wants to drop the public deficit to 3.3 percent of GDP in 2025, down from an expected 3.8 percent this year. However, this budget comes at a time when the economy is growing slowly; forecasts show a mere 0.5 percent growth for the year.
Key budget changes include:
– The lower two income tax brackets will merge, meaning people making 28,000 euros a year will pay 23 percent tax instead of 25 percent.
– More people will qualify for social security tax reductions.
– Families who have a newborn baby and earn up to 40,000 euros a year will receive a 1,000-euro bonus to encourage more births.
While environmental groups say there isn’t much done to fight climate change, Italy is removing bonus funds for gas boilers as requested by the EU. Instead, families who buy energy-efficient home appliances can get bonuses of up to 100 euros, and 200 euros for households earning under 25,000 euros.
Additionally, companies that hire more workers and reinvest their profits will benefit from a lower corporate tax rate, which will drop from 24 percent to 20 percent. To help fund these changes, Italy’s banking sector will provide a total of 3.4 billion euros over 2025 and 2026, agreeing to delay tax credits for two years to give the government the money it needs now.
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