Cutting the 2023 tax wedge, go to increases but not for everyone: here’s why
With tax wedge means the sum of taxesdirect and indirect, and gods social security contributions which affect the cost of labor. In practice, the tax wedge is the difference between gross salary paid by the employer and the net pay received by the worker.
There Budget law 2023 has provided for the extension of the cut the tax wedge, already in force for the second part of 2022. This is the strengthened extension of the cut introduced by the Draghi government and concerns the cut in the share of social security contributions “for disability, old age and survivors” paid by the worker in the paycheck. In essence, it is one discount on payroll deductionsthat varies based on Income Amount.
Cut of the 2023 tax wedge, changes based on income
The novelty is the extension of the cut in the tax wedge to 3% for workers who receive up to 25,000 euros of annual gross incomedistributed over 13 months.
For whom to pass this pay, e up to 35,000 eurosthe cut of the contribution wedge remains at 2%.
The cut in the share of social security contributions paid by employees (public and private) is therefore increased by one percentage point.
Cutting the tax wedge, who is entitled to the discount
There 2% contribution reduction it concerns all employees with a gross annual income of up to 35,000 euros. Who, on the other hand, has a annual gross income up to 25 thousand euros can count on one 3% discount.
The benefit, being fixed and in the same percentage for everyone, benefits higher incomes among those who are entitled to it, therefore themajor increase in payroll those who have it will have it higher salary.
The 3% cut
The contribution discount is due to all employees, excluding domestic workers (which have specific legislation and lower contribution rates), which have a gross monthly salary of less than 1,923 euros, out of 13 months. In practice, the 3% discount on contributions is applied throughout the year, including the thirteenth month if the gross salary, divided by 13 months, is less than 1,538 euros. We are talking about an extra ten euros a month. With a minimum of around 8 euros for incomes of around 10,000 euros and a maximum of 15 euros per month for incomes of 20,000 euros.
The 2% cut
The contribution discount is due to all employees, excluding domestic workersthat they have one gross monthly salary of less than 2,692 eurosout of 13 months.
The monthly cap
Inps clarified in a circular that the salary thresholds (taxable social security) identified by the law as monthly ceilings affect the determination of its entity: “Where the taxable salary exceeds the limit of 2,692 euros per month, there will be no reduction in the fee to be paid by the worker. Therefore, if the worker in a single month receives a salary of more than 2,692 euros gross, for that month he will not be entitled to the benefit“.
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