What changes for young people with the 2027 budget law? Potentially little, since the financial measure will mostly affect middle-to-high incomes

The Council of Ministers recently approved the budget bill, the document that sets out the State's revenues and expenditures for 2027. The government's proposal will now go before Parliament, where it will be debated and may be amended before final approval, expected, as usual, by 31 December. Some parts of the text are likely to be revised, but without any substantial changes to the framework presented by the majority led by Giorgia Meloni.

The financial package has a total value of 26 billion euros, a significant portion of which, however, is earmarked to cover investments in energy and defence required under European rules. This figure does not represent the State's entire budget for 2027 (overall public spending is in fact much higher), but rather indicates the additional resources used to fund the new political and economic measures planned by the government, raised through tax increases, public spending cuts, and increased borrowing.

The 2027 budget law will also be the last before the general elections scheduled for next year. With the vote in mind, the majority parties would have had an interest in introducing measures capable of winning broad public support, as is customary among political forces, but the limited resources available to the State have significantly narrowed the room for manoeuvre, forcing the government to spread them across numerous measures of rather modest scope. The result is a financial package that experts have judged to be, on the whole, unambitious, with no particularly bold economic interventions, much as has been the case in previous years.

The 2027 budget law offers few measures aimed at young people

One of the most significant new features of the budget bill could be a reduction in IRPEF — the personal income tax — for employed workers with middle-to-high incomes. In essence, the measure provides for a further easing of the tax burden for those earning between 50,000 and 55,000 euros gross per year. Currently, the system applies three different tax rates: 23% on incomes up to 28,000 euros, 33% on incomes between 28,000 and 50,000 euros, and 43% on incomes above that threshold.

Under the new financial package, the upper limit of the second tax bracket would be raised to 55,000 euros, reducing the tax rate on the additional five-thousand-euro band from 43% to 33%. The government estimates a maximum benefit of 500 euros per year for the taxpayers concerned, but this measure primarily affects workers with middle-to-high salaries and would bring no benefit to those earning less than 28,000 euros, the bracket that includes a significant proportion of younger workers.

A measure potentially affecting a broader share of workers instead concerns the taxation of pay rises arising solely from the renewal of national collective bargaining agreements (CCNL), which govern the majority of employment relationships in Italy. The preferential 5% tax rate on these wage increases has been confirmed for employees earning up to 33,000 euros, though the measure applies exclusively to those who will actually receive a pay rise.

For self-employed workers, a new feature of the 2027 budget law concerns the expansion of the flat-rate scheme: the maximum revenue or earnings threshold for accessing the so-called flat tax would rise from 85,000 to 100,000 euros. This scheme provides, among other things, for a fixed tax rate of 15%, which under certain conditions drops to 5%. Here too, however, the financial package targets income thresholds that are quite high and often out of reach for young workers. In essence, the only measure in the 2027 budget law that could make a real difference for many young workers is the exemption from paying road tax on low- to medium-powered cars and motorcycles, a levy that vehicle owners must pay every year.

Understanding the problem of low wages in Italy

The first two points of the "Italia in piazza" manifesto — the movement that organised peaceful demonstrations against the rising cost of living in several Italian cities, which in some cases escalated into varying degrees of unrest — address job insecurity and inadequate wages. In Italy, workers' pay has remained virtually unchanged since the early 1990s, while in countries such as France it has risen by 25% over the same period.

The main cause of this chronic problem in the Italian economy is that the country's GDP — the best available measure of how the economy is performing — has been essentially stagnant for decades, preventing wages from growing accordingly. Meanwhile, the cost of living has risen steadily, to the point where a significant proportion of workers find that their pay is no longer sufficient to cover everyday expenses.

The situation is even more difficult for young people entering the labour market today. The salaries offered to those starting their first job are often not commensurate with their level of education and acquired skills, nor with the current cost of living. The issue is particularly acute in major cities, where rent, transport, and other essential expenses make it increasingly difficult to live independently.