What are the three important changes to advance taxes and deductions in the July tax reform that affect all Italians? Final approval of the tax reform is expected, and the government’s aim is to close the provision by the summer holidays, with some measures likely to be already active in the fall and others starting January 1st.
- What are the latest july changes to withhold tax reform
- How tax advances might change with the new tax reform
- Irpef news and deductions in the next tax reform
What are the latest july changes to withhold tax reform
One of the innovations that has recently been included in the new tax reform relates to a reduction in the withholding tax for the self-employed.
Withholding tax applies to both self-employed and employees and the withholding is paid to the tax authorities at different rates and the alternative has to pay the amount to the treasury.
Withholding tax generally applies to compensation for:
- income from employment and similar income;
- compensation for the self-employed;
- commissions even for incidental services;
- Interest and dividends on bonds, similar securities and commercial papers;
- Awards of all kinds.
How tax advances might change with the new tax reform
Among the proposed innovations in the new tax reform there is also The possibility of paying the November tax advance in installments.
Advances are, in fact, paid in one solution in November but to meet the current needs of workers, the new tax reform has provided that advances can be endorsed from November until June.
Irpef news and deductions in the next tax reform
With tax reform, Meloni’s government aims to Reduce the current four personal income tax rates From the income tax to bring them to three. The Irpef rates currently in effect are as follows:
- 23% for an income of up to 15,000 euros;
- 25% for incomes between 15,000 and 28,000 euros;
- 35% for incomes between 28,000 and 50,000 euros;
- 43% for incomes over 50,000 euros.
To review personal income tax rates on the basis of income groups, various hypotheses are under study. The first hypothesis envisions the following possible new rates:
- 23% for those with incomes up to 15 thousand euros;
- 27% for those with incomes between 15,000 and 50,000 euros;
- 43% for those whose income exceeds 50 thousand euros.
With these new personal income tax rates, those with an annual income of between €28,000 and €50,000 per year will have significant increases in pensions, given that the tax rate will drop from 35% to 27%.
On the other hand, reductions are envisaged for those whose annual income is around 25,000 euros, while there will be no news about the first income bracket of up to 15,000 euros, that is, specifically for those with lower incomes. Another hypothesis for personal income tax revision states the following rates:
- 23% for an income of up to €28,000;
- 33% for incomes between 28,000 and 50,000 euros;
- 43% for income over 50 thousand euros.
With this Irpef revision scheme, all income groups will benefit, bearing in mind that those with an income of €25,000 per year will pay about €200 less in taxes, to around €700-1000 for those with higher incomes.
Another hypothesis for personal income tax revision could envisage the following three new rates:
- rate of 23% for income less than €15,000;
- rate of 27% for income between 15,000 and 75,000 euros;
- An average of 43% for income above €75,000.
In this case, those with higher incomes between 50,000 and 75,000 euros will have higher incomes, while reductions in amounts will be expected for those with incomes between 15,000 and 28,000 euros, and therefore the tax rate will rise from the current 25% to 27%. Even with this hypothesis of personal income tax revision, nothing will change for the lower income bracket.
Finally, the last Irpef review hypothesis envisions the following rates:
- 23% rate of income from €8,500 up to €28,000;
- 35% rate of income from €28,001 to €50,000;
- An average of 43% for income above 50 thousand euros.
In this case, the incomes will rise between 15,000 and about 30,000 euros and between about 50-60 euros, up to 700 and even 1,000 euros for those with higher incomes. However, Prime Minister Meloni announced more news that may relate to the first rate of 23%, specifically for low-income people, with cuts.
Besides reviewing personal income tax rates, With tax reform, deductions and deductions will also change. To reorganize the deductions, a scheme is thought of with different percentages of deductions on the basis of the income earned which could be as follows:
- deductions of 4% of income for the segment up to 15 thousand euros;
- deductions of 3% of income for the category between 15,000 and 50,000 euros;
- deductions of 2% of income for the segment between 50 thousand and 100 thousand euros;
- No deductions for income over 100,000 euros.
In addition to deductions, with the new tax reform, deductions could also change, for both employees and retirees, allowing for a reduced tax base compared to gross income and thus paying lower personal income tax.
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