Italy’s 2026 Budget Bill: New measures to support jobs, families, and social inclusion

At a glance

• On 18 October 2025, the Italian government approved the draft 2026 Budget Bill (draft budget).
• The three main objectives of the Bill are: fostering stable employment, supporting families, and enhancing social protection for vulnerable groups.

Presented on 18 October 2025, the draft budget introduces a wide range of labour and social policy measures designed to boost employment, improve work–life balance, and strengthen the welfare system for those in need.

Job incentives for young people and women

The government plans to extend and expand tax incentives for employers offering permanent contracts to young workers under 36 and to women.

Companies hiring under these conditions will benefit from reduced social security contributions (employer payments to Italy’s pension and welfare system) for up to 24 months.

Funds will be available until 2028, with priority given to businesses in Southern Italy, where unemployment rates are highest.

Inclusion allowance and income support

The existing Inclusion Allowance, a financial support programme for low-income households, will be extended to 18 months, with the possibility of a further 12-month renewal.

The draft budget also increases funding for anti-poverty programmes and extends income-support schemes for workers whose companies are in crisis or who have been temporarily laid off.

Support for pensioners and families

From 1 January 2026, pensions for low-income retirees will increase by EUR20 per month, amounting to EUR260 per year in the most vulnerable cases.

To encourage employment of mothers, private employers who hire women with at least three children under 18, who have been unemployed for at least six months, will receive a full exemption from social security contributions, worth up to EUR8,000 per year.

This incentive will vary depending on the contract type and will remain in effect, with gradually increasing funding, until 2035.

Greater flexibility and rights for working parents

From 2026, employees with at least three dependent children will have the right to request part-time work, provided the youngest child is aged ten or under, or regardless of age if any of the children have a disability, enabling them to reduce their working hours.

Employers who accommodate these requests without reducing the employees' total working hours will be eligible for a social security exemption of up to EUR3,000 per year for 24 months.

Additionally, parental leave will be extended from 12 to 14 months, and paid leave for a child’s illness will double from five to ten days.