Cutting the wedge, from 45 to 100 euros more in the paycheck for incomes up to 35 thousand euros: the simulations – Corriere.it

To counter the drop in purchasing power caused by high inflation, the government has decided to further cut the contribution wedge on medium-low wages, so as to increase the net payroll. The decision will be taken with a decree law approved in today’s meeting of the council of ministers. The further discount on the employee’s social security contributions (but without effects on the pension, because the share will be paid to INPS by the State) will start from July and will last until December, without affecting the thirteenth. It will be four percentage points on wages up to 35,000 euros gross (about 1,900 euros net per month). It adds up to the three-point cut for wages up to 25 thousand euros gross (about 1,520 euros net per month) and two points for those between 25 and 35 thousand euros, set for 2023 with the Budget law approved last December . The discount, in the second part of this year, will therefore be a good seven percentage points for those who earn up to 25,000 euros and six points for those who earn between 25 and 35,000 euros gross, with an increase in the payroll that could come close to the 100 euros, according to the simulations by the De Fusco Labor & Legal studio for Il Sole 24 Ore.

Between 10 and 25 thousand euros

Let’s see some examples. A salary of 10,000 euros gross (about 780 euros net) is already benefiting for 2023 from a three-point cut in social security contributions withheld in payroll, with an increase in net pay of just over 19 euros per month, to which another 25 euros will now be added, due to the new cut of four points. So from May the net will rise overall by almost 45 euros. Which becomes 67 euros (compared to the 38.5 euros enjoyed so far) for gross wages of 15 thousand euros; 77 euros (compared to 44) for those of 20 thousand and 96 euros (compared to 55) for those who take 25 thousand euros.

Between 25 thousand and 35 thousand euros

Equally important, but in smaller proportions, are the increases in the net payroll for those who earn between 25 and 35 thousand euros gross. For example, those who have a salary of 27,500 euros have so far enjoyed a net increase of around 30 euros a month, thanks to the cut of two points. Now the discount will increase by about sixty euros, thanks to the further reduction of the levy of four points, reaching around 90.5 euros per month. The same gain reserved, starting this month, for those with a gross salary of 30,000 euros. Instead, it rises to 91.5 euros for those who earn 32,500 euros and 98.5 for those who earn 35 thousand euros. In summary, the largest increases in absolute figures will concern the highest wages, but those who will be rewarded more, in proportion, will be the lower ones. As it is easy to understand, the extra 45 euros for those who earn less than 780 euros net per month have a greater weight than the 98 for those who earn 1,900.

What happens in 2024?

To finance the new cut in the wedge for this year, the government will use the almost 3.5 billion euros of budget deviation authorized by Parliament. That is, it is ucoverage using the deficit (albeit without increasing it compared to forecasts), to which other resources have been added for a total of 4 billion. This allocation (which if projected over an entire year is worth around 8 billion), adds up to the 4.6 already allocated with the Budget law to finance the wedge cut applied from last January until now. Therefore, if the government wanted to confirm the cut of the wedge in 2024 with the increases of the same decided today, it would have to find a dozen billion with the budget maneuver that it will present in September. Difficult operation unless the discount on the wedge is absorbed in the Irpef reform which should also take effect from next January 1st.

Fringe benefit at 3,000 euros

The maneuver in support of employees is completed by the increase in the ceiling on so-called fringe benefits, i.e. tax-free company bonuses, including those in the form of bill payments. The roof goes up, for this year, from 268 euros to 3 thousand euros, but only for workers with dependent childrenregardless of income. As can be read in the draft of the decree law entered into the council of ministers, limited to the 2023 tax period, the value of the goods sold and the services provided to employees with dependent children, as well as the sums disbursed or reimbursed to them by their employers for the payment of domestic utilities for the integrated water service, electricity and natural gas within the overall limit of 3,000 euros. Estimated budget: €142 million.