Modifiche all’IRPEF e decontribuzioni nel 2024: gli impatti sui redditi delle persone fisiche (Revisions in Personal Income Tax and Social Contribution Reductions in Italy in 2024: The Effects on Net Personal Incomes)

With this analysis, we provide some insights into the distributional impact of the fiscal changes introduced by the 2024 Budget Law, focusing on three main modifications: adjustments to the personal income tax rates (IRPEF), social security contribution reduction (decontribuzione), and fringe benefits’ taxation. The analysis presents both the aggregate effect and the contribution of each change, with a particular focus on the distributional perspective. We use the EUROMOD tax microsimulation model and EU-SILC 2022 sample data (2021 incomes). Our findings indicate that the changes to IRPEF rates do not support lower incomes and instead favour middle- and higher-income groups. The reduction in social security contributions for employees, by increasing IRPEF taxable income, tends to soften the net positive effect of the IRPEF rate adjustments by raising the taxable base due to the lower deduction related to social security contributions. The change in the exemption threshold for fringe benefits affects a very limited portion of individuals.