From 2020, in order to be entitled to the 19% personal income tax deductions, two conditions must be met. The first, which we have already talked about, is don't pay in cash, but by credit card, debit card or other traceable instruments. The second is to meet two new income limits.
WHOLE IRPEF DEDUCTION UP TO 120 THOUSAND EUROS
La 2020 Budget Law establishes that from this year the Irpef bonuses on the expenses envisaged by article 15 of Tuir (the consolidated text of income taxes) they are due in full only to taxpayers with gross income up to 120 thousand euros.
HOW IT WORKS OVER 120 THOUSAND EUROS
Beyond this threshold, the percentage of deduction is progressively reduced as the income increases, until it is zeroed for gross incomes from 240 euros onwards.
To find out the deduction to which you are entitled in the 120-240 euro income bracket, you need to calculate the ratio between 240 euro, reduced by total income, and 120 euro.
AN EXAMPLE OF CALCULATION
Let's take a practical example, taking an income of 150 thousand euros as a reference. In this case, the calculation to be made is the following:
(240.000 – 150.000) : 120.000 = 0,75
It means that you are entitled to 75% of the deduction, or 75% of 19%. The personal income tax deduction therefore drops to 14,25%.
Warning: the total income from which to start is understood to be net of the income (ie the revalued cadastral income) of the property used as a main residence and related appurtenances.
THE EXCEPTIONS
However, there are several exceptions. The Irpef deductions of 19% are always usable in full (regardless of income) on these expenses:
- interest expense and ancillary charges on agricultural loans or mortgages;
- interest expense and ancillary charges on mortgage loans taken out to purchase or build properties to be used as a main residence;
- health expenses for pathologies that give the right to exemption from participation in health expenses (they are always indicated in thearticle 15 of the Tuir: letter c, paragraph 1).
EXPENSES AFFECTED
Other important expenses will be affected instead. The list includes the following items:
- veterinarians;
- kindergartens;
- sports activities or university courses for dependent children;
- real estate agents' fees;
- funeral honours;
- bus, metro and tram passes.
THE RISK ON HIGH INCOME
The new rules involve the risk that taxpayers with gross incomes of over 240 euros, not being able to deduct any expenditure at 19%, choose to pay everything in cash. In fact, there is no incentive for them to use traceable tools.
