Salary increases after cutting the contribution wedge Budget Law 2023 Meloni’s government is very modest and humble. Indeed, the pockets of Italian workers will rise from 20 to 33 euros per month. Only workers will benefit, not companies. But let’s go in order. In essence, the tax wedge is the difference between the “gross” amount the company pays the employee, and the amount that worker finds in their net pay. The tax wedge It measures the weight of business taxes, i.e. contributions paid by employees, those paid by the employer and income taxes. Its weight in our country is 46.5%, which is one of the highest percentages among the countries of the Organization for Economic Co-operation and Development (OECD). This means that for every €100 the company pays an employee, roughly half, well €46.50, goes to taxes. Well, the budget law passed by the Cabinet also includes a cut in the tax wedge. Let’s try to understand in practice how this cut affects Payroll.
This measure costs the Italian state €4.185 billion, and provides a tax exemption of 2% for gross income up to €35,000 and 3% of gross income up to €20,000. The two-point reduction of income amounting to €35,000 in gross salary, for the whole of 2023, is confirmation of the Draghi government’s action. Meloni’s government added only a 1% cut to salaries of up to €20,000. Compared to 2022, the increase fluctuates from just over 6 euros per month for gross wages of 10,000 euros to 11 euros per month for gross wages of 20,000 euros.
today The sun is 24 hours she has published Simulate worker payroll with the effect of cutting the tax wedge. In detail, for a combined annual gross salary of €10,000, the total impact would be €13 per month (those cut by the Draghi government), plus another €6, for a total of €19.25. On an annual basis, this brings us to 231 euros. Those who instead manage to earn 20 thousand will receive approximately 33 more per month, as a result of the two reductions of 22 and 11 euros respectively.
And what happens to those with a gross salary of more than €20,000 and up to €35,000? For these workers in 2023, nothing will change compared to the current situation. Compared to 2021, the tax wedge cut brought a benefit of just over €27 per month and just over €329 per year for wages of €25,000. The 2% cut by the Draghi government, now confirmed, has instead reduced the tax by about 33 euros per month for gross wages of 35,000 euros, and by more than 394 euros on an annual basis. In short, according to the Economic Gazette’s calculations, the effect of lowering the contribution wedge will be as follows:
- 231 euros per year, or 19.25 per month, for those earning 10,000 euros per year;
- 346 euros per year, or 28.88 per month, for those earning 15 thousand;
- 395 euros per year, 32.92 per month, for those earning 20 thousand;
- 329.23 euros per year or 27.44 per month for those earning 25 thousand;
- 395.08 per year, 32.92 per month, for those earning 30k;
- 394.23€ per year or 32.85€ per month for someone earning 35,000.
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