Budget focuses on defense and family policies

The Italian government, led by Prime Minister Giorgia Meloni, has approved a budget focused on defense and family-related policies, ahead of the legislative elections in 2027. This final "manovra" (financial law) includes 26 billion euros in new spending, targeting areas such as family support, tax reduction, and business incentives.

New tax brackets and family benefits

The budget plans to raise the income threshold for the second tax bracket to 55,000 euros annually, applying a 33% tax rate. Families will also receive extended parental leave and financial assistance for each birth, along with a savings account for children. Additional benefits include early retirement schemes and health checks for seniors.

Defense spending and energy support for businesses

Defense is the second-largest expenditure in the budget, with about 4.5 billion euros. The government also aims to strengthen business competitiveness and secure energy supplies, particularly through support for photovoltaic installations. A six-month delay in taxes on single-use plastics and sugary drinks is intended to ease pressure on businesses.

Funding sources and revenue measures

To cover the budget's costs, the government will collect five billion euros from the banking sector, 700 million euros from the energy sector, and the same amount from the gaming industry. Revenue will also come from personalized license plates, with 600 euros per vehicle.

Economic outlook and deficit concerns

Italy, the second most indebted European country after Greece, is projected to have limited economic growth of 0.8% in 2027, with a 3.4% GDP deficit. The European Commission has allowed some budget flexibility for energy and defense-related expenses, including school infrastructure improvements.

Spending cuts and parliamentary approval

The government has mandated a one billion euro reduction in ministry spending. Economy Minister Giancarlo Giorgetti called the budget "serious," though final approval still needs to come from the Italian Parliament. The budget also includes a 2,500 euro bonus for workers under 30 to address youth emigration.