No tightening is coming on the taxation of Tfr (severance pay). The safety net with the possibility of applying the more favorable taxation with the brackets and rates in force as of December 31, 2026, will continue to remain fully operational. This emerges from a careful reading of the new Consolidated Income Tax Act (Legislative Decree 117/2026), which will come into force on January 1, 2027.
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The lifeline remains
Article 21 of the Consolidated Act indeed reports, in paragraph 11, the safeguard clause already in force today: “For the purposes of determining the personal income tax due on severance pay, equivalent indemnities, and other indemnities and sums related to the termination of the employment relationship, referred to in Article 19, paragraph 1, letter a), the rates and income brackets in force as of December 31, 2006, apply if more favorable.” Essentially, if at the time of calculating the taxation of the Tfr kept in the company (because that in the funds is subject to substitute tax) the rates in force would result in a less favorable treatment, a protection for the worker is triggered that allows access to a lower taxation.
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The misunderstanding of the repeal
The optical effect of the repeal of the safeguard was probably caused in some observers by the list (contained in Article 376) of rules destined to give way with the entry into force of the new Consolidated Act, among which appears the lifeline contained in Article 1, paragraph 9, of Law 296/2026 (the 2007 Finance Law). Only now, as anticipated, that provision fully enters Article 21 of the new Consolidated Act dedicated to severance and end-of-service indemnities.
The clue of the lack of revenue increase
Moreover, the technical report had not foreseen any increase in revenue linked to a possible repeal of the safeguard. A repeal that would have affected not the low to middle incomes (on which there have been interventions in recent years of consolidations and rate reductions) but the higher ones with more substantial amounts of Tfr. But we are talking about a purely hypothetical discussion since everything will remain as it is even in 2027.
