The Italian government has introduced a new flat tax measure aimed at alleviating the financial burden associated with salary increases as part of its latest budget law. Following the approval of this initiative, the flat tax rate will be set at 5% for salary increases resulting from contractual agreements effective from 2024 onwards. This legislative step seeks to support workers' purchasing power recovery while encouraging further contract negotiations by providing favorable tax treatment for private sector employees earning up to 33,000 euros.

In addition to the flat tax on salary increases, the new measures include a 15% tax rate applied to additional compensation for night work, holiday work, shifts, as well as for bonuses and availability pay. The government aims to incentivize various forms of work that typically require extra compensation through this additional tax measure. These changes are set to be officially regulated by the financial agency under the direction of Vincenzo Carbone, reflecting the government's proactive approach to addressing existing fiscal challenges.

As Italy grapples with economic recovery post-pandemic, these tax measures could have significant implications for both employers and employees in the private sector. By lightening the tax burden associated with salary increases and additional work compensations, the government hopes to stimulate job creation and wage growth, ultimately benefiting the economy at large. This policy may also influence labor relations, encouraging more robust negotiations between employers and employees about pay and working conditions.