Irpef tax reform: €18 billion cost excludes self-employed and freelancers

Italy’s 2025 tax overhaul favors employees and leaves out over 10 million workers

A costly reform with selective benefits

The 2025 Irpef tax reform and the revised payroll tax cut introduced in the latest budget law come with a hefty price tag: nearly €18 billion annually over the 2025–2027 period, equal to 0.8% of Italy’s GDP. According to Unimpresa’s Research Center, the benefits will go only to employees, while freelancers, self-employed workers and low-income earners are entirely excluded.

Self-employed and low-income earners left behind

Despite intentions to simplify the tax system—by reducing income brackets from four to three and increasing the no-tax area—the reform excludes over 6 million freelancers and 4 million working poor. The new €1,000 fixed deduction targets only those earning between €20,000 and €40,000 annually, while those earning less receive a proportional bonus. However, these measures are not structural and fail to create a stable tax curve for long-term planning.

Partial coverage and questionable sustainability

The reform’s tax cut results in a structural revenue shortfall of €5.2 billion a year. This gap is only partially offsetby:

• €0.6 billion from cuts to family-related deductions
• €0.3 billion from capping deductible expenses based on income and number of children.

The net loss exceeds €4 billion annually, without sufficient compensatory measures. According to Unimpresa, this creates a risky imbalance that may affect the national budget, unless spending is rationalized and tax evasion is seriously tackled.

A fragmented system that punishes regular contributors

As Unimpresa’s analysis highlights, the effective Irpef rate only decreases by 0.9% for middle-to-high income brackets above €42,800, offering minimal relief. Meanwhile, those who contribute regularly—like autonomous workers and professionals—see no benefits. This raises concerns about horizontal equity and reinforces the perception of a two-tier tax system that favors traditional employment contracts.

A modern tax system must be inclusive

Although the reform signals progress toward a simpler and growth-oriented tax system, it still fails to address millions of contributors. For a truly modern tax policy, the reform must be extended to all workers, regardless of employment status. In the words of Unimpresa’s National Councilor Manlio La Duca:

“The tax system of the future must no longer be fragmented or biased. A competitive country needs a tax policy that rewards merit, value creation and effective contribution to growth.”

Domande e risposte

1. What does the 2025 Irpef reform include?
It reduces income brackets from four to three, raises the no-tax area and introduces new bonus schemes.

2. Who qualifies for the new €1,000 deduction?
Employees earning between €20,000 and €40,000 annually.

3. Are freelancers and self-employed workers included?
No, they are excluded from all new benefits and tax breaks.

4. What is the total cost of the reform?
About €18 billion per year over three years.

5. How will the reform be funded?
Partly through cuts to family deductions and new caps on deductible expenses.

6. What impact does it have on the middle class?
The effective tax rate drops by only 0.9% for those earning over €42,800.

7. Who else is excluded from the reform?
Low-income earners and workers without consistent taxable income.

8. Is the low-income bonus permanent?
No, it is temporary and not built into the long-term tax system.

9. What does Unimpresa recommend?
Broadening the beneficiary base and building a neutral, transparent and fair tax system.

10. Is the reform financially sustainable?
Not without deeper spending reform and stronger action against tax evasion.