The parties supporting Premier Mario Draghi's government have reached an agreement with the economy ministry for income tax IRPEF to be cut and simplified in the 2022 budget law, sources said Thursday.
The number of tax bands will drop from five to four, with the elimination of the 41% band for incomes between 55,000 and 75,000 euros.
All income over 50,000 will now be taxed at the top rate of 43%.
The next tax band down, which will now apply to earnings between 28,000 and 50,000 euros, falls from 38% to 35%.
The 15,000-28,0000 rate is set to fall from 27% to 25%.
The rate for earnings up to 15,000 will stay at 23%.
However, the 80-euros-a-month tax bonus for lower earners introduced by ex-premier Matteo Renzi and subsequently increased to 100 euros a month, is set to scrapped as part of the reform, sources said.
Deputy Economy Minister Gilberto Pichetto said the overhaul was "a first structural step, not just one for 2022".
Around seven billion euros of the eight billion earmarked for tax cuts in the budget are set to go the IRPEF overhaul, with the other billion going on the elimination of the IRAP business tax for the self-employed, the sources said.
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