Tax deductions are those amounts that are subtracted from the gross tax calculated according to income brackets and result in lower net taxes payable by taxpayers.
The deductions are a tax benefit that is due to the recipients of all taxable benefits provided by the Institute.
As a withholding agent, INPS recognizes the following types of deductions:
- deductions on income received as an employee or similar, or as a pensioner;
- deductions for dependent family members at the request of the taxpayer.
Deductions on income received as an employee or similar, or as a pensioner
Income tax deductions are a right and belong to all individuals who have an income from work as an employee or similar or from a pension (referred to in Article 13 of the TUIR) that does not exceed, with effect from 1 January 2022, the limit of €50,000. The amount of deductions is proportionate to the period of employment or pension in the year.
Benefit recipients who are interested in not having total or partial recognition of the deductions in question and/or in the application of a higher rate are required to notify the INPS every year. In the absence of explicit communication, the Institute applies the rates according to income brackets and recognizes the tax deductions about the amount of income paid and the number of days it is received.
Deductions for dependent family members
Tax deductions for dependent family members (referred to in Article 12 of the TUIR) are linked to the family condition of the individual concerned and vary according to both the composition of the household and the total income received by each taxpayer.
The amount of deductions is proportionate to the months of the year that the family members were dependent and is applied from the month in which they became dependent until the conditions specified by the current legislation ceased.
Family members who receive a total annual income, gross of deductible charges, not exceeding €2,840.51, a limit raised to €4,000 for children up to the age of 24, are considered to be fiscally dependent.
Dependent family members are:
- the spouse who is not legally and effectively separated;
- children, including recognised natural children and adopted or foster children;
- other family members, provided that they live with the person entitled to the benefit provided by the INPS or that receive from the INPS a maintenance allowance not resulting from measures taken by the judicial authority.
With effect from 1 March 2022, as a result of the establishment of the Single and Universal Allowance:
- deductions for dependent children are payable only if the child is 21 years of age or older;
- the increases in tax deductions for children under three years of age, for children with disabilities, for families with more than three dependent children and the additional tax deduction of €1,200 for large families provided for in paragraph 1-bis of Article 12 have been repealed.
The deduction is divided half and half between parents who are not legally and effectively separated or, subject to agreement between the parties, the whole deduction goes to the parent with the highest total income.
Citizens are obliged to inform the Institute of any influential changes in family expenses that may occur during the year, to allow for the adjustment of the tax system applied to the benefits.
Citizens can claim tax deductions for income and dependent family members through the online service by logging in with their credentials.