Pension Increase from April 2024: Starting from April 2024, a significant number of retired individuals in Italy will witness an increase in their pensions. This positive change can be attributed to two crucial factors: the 2024 tax reform, which lowered the Personal Income Tax (IRPEF) for those earning between 15,000 and 28,000 euros, and the ordinary revaluation that aligns pensions with inflation. Now, the question arises: who will be the beneficiaries of this pension increase, and what will be the extent of this increment?
In this article, we go into these inquiries by examining the new provisions of the 2024 budget law and the data presented by the National Social Security Institute (INPS). Together, we will uncover the exact amount of pensions in 2024, broken down by income brackets, and explore any retrospective changes.
Pension Increase from April 2024: What Is It?
The recent tax reform of 2024 has led to an increase in pensions starting from April 2024. This reform lowered the IRPEF rate for individuals earning between 15,000 and 28,000 euros. Additionally, a regular equalization has been implemented to adjust pensions according to inflation. The extent of the increase is determined by both the pension amount and the total income of the pensioner.
Pension Increase from April 2024: How It Works
In general, this action has the potential to result in an annual tax reduction of up to 260 euros and a potential increase of up to 5.4% in pension benefits. It is important to emphasize that the extent of these benefits will vary depending on the financial circumstances of each pensioner.
Starting from April 2024, there is another positive aspect to consider. Retroactive payments for the initial months of the year will also be adjusted. This implies that pensioners will finally receive the money owed to them from previous months, undoubtedly improving their overall financial conditions.
New IRPEF Tax Brackets
The tax system in Italy primarily relies on IRPEF, which is the tax applied to income derived from dependent work, a portion of self-employment income, and pensions. The total annual income determines the specific tax rate applied, and in the previous year, there were four different tax brackets.
Here are the new IRPEF tax brackets for 2024, as they become three:
- For incomes up to 28,000 euros: 23% tax rate;
- For incomes from 28,000 to 50,000 euros: 35% tax rate;
- For incomes over 50,000 euros: 43% tax rate.
The mentioned percentages also apply to pension amounts paid by INPS. For example, if a pensioner has an annual income below 28,000 euros, the tax deductions on their pension will be 23%. Additionally, any deductions or other municipal and regional taxes will be applied.
This year saw a reduction in the tax burden on pensions compared to previous years. This is mainly because two existing tax brackets were combined into one. In the past, the first bracket applied only to incomes below 15,000 euros, but now it extends up to 28,000 euros.
Pension Increases 2024: Istat Revaluation
The new cuts to IRPEF are not the only determining factor for pension increases. The Istat revaluation also plays a role in boosting monthly payments. Every year, Istat proposes evaluations based on the actual cost of consumer goods, and this year, the high inflation in Italy is taken into account.
There is talk of a temporary revaluation of +5.4% for this year, which is expected to increase further in 2025. Starting from January 2024, automatic equalization of pensions will be implemented, meaning that monthly sums will be increased to account for inflation. This will particularly benefit those receiving minimum pensions.
In practical terms, many pensioners can expect an increase of up to 122 euros for sums that are up to 4 times the minimum threshold.
It is important to note that the minimum amount will also change in 2024, increasing from 563.74 euros to 614.77 euros. Overall, the combination of revaluation and fiscal decisions will lead to a slight increase in pension sums for Italians.
The Istat revaluation is expected to increase from the end of 2024 to the beginning of 2025, with a minimum increase of 0.3 percentage points. As a result, we will witness a variation of +5.7%.
Pension Increase from April 2024: The Increase
Here is a clear overview of the expected pension increases, which are determined by the ratio between the pension amount and the minimum wage.
- Up to 4 times the minimum benefit: 100% increase
- Between 4 and 5 times the minimum benefit: 85% increase
- Between 5 and 6 times the minimum benefit: 53% increase
- Between 6 and 8 times the minimum benefit: 47% increase
- Between 8 and 10 times the minimum benefit: 37% increase
- Over 10 times the minimum benefit: 22% increase
If your gross annual pension is 20,000 euros, it falls within the range of 4 to 5 times the minimum wage. This means you will receive an 85% increase above inflation, for a total of 5.4%. The increase amounts to 4.59%, equivalent to 918 euros annually or 76.5 euros monthly.
If your gross annual pension amounts to 40,000 euros, it will place you in the bracket between 6 and 8 times the minimum wage. This means you will experience a 47% increase over inflation, with an increase of 2.538%, equivalent to 1,015.2 euros annually or 84.6 euros monthly.