Italy's Parliament has approved the 2025 budget, which aims to balance the demands for EU deficit reduction with tax cut promises made by Prime Minister Giorgia Meloni.

Valued at approximately €30 billion (around US$31 billion), the budget allocates more than half of its funds to tax and social security cuts, particularly benefiting low and middle-income earners.

As part of these measures, the budget increases eligibility for social or tax charge reductions, allowing a larger number of citizens to benefit.

Key tax measures include merging the lower two income tax brackets, enabling individuals earning €28,000 annually to pay a reduced tax rate of 23% instead of 25%.

Additionally, corporate tax rates will decrease from 24% to 20% for companies that increase hiring and reinvest their profits.

The budget also introduces a bonus for purchasing energy-efficient appliances, offering up to €100, or €200 for families earning under €25,000.

The government's target is to reduce the public deficit to 3.3% of GDP by 2025, down from an expected 3.8% in 2024.

However, ISTAT estimates that Italy's GDP growth for 2024 will be only 0.5%, significantly lower than earlier forecasts.

Italy continues to face pressure from Brussels regarding its nearly €3 trillion debt, which is the second-highest in the EU relative to GDP.

Despite these financial measures, environmental groups have criticized the budget for lacking adequate actions against climate change, although the government has eliminated a gas-fired boiler bonus under EU pressure.