The Italian Cabinet has approved the Documento programmatico di finanza pubblica (DPFP), the new fiscal framework replacing the Nadef. The plan sets a deficit target of 3% for 2024 and forecasts GDP growth of 0.5% in 2025 and 0.7% in 2026, supported by a modestly expansionary budget law.

Prime Minister Giorgia Meloni’s fourth budget will prioritize tax reform, support for families, jobs, healthcare, and defense. Around €12 billion will be allocated to defense over the next three years, amounting to 0.5% of GDP by 2028—provided Italy exits the EU’s excessive deficit procedure.

On the fiscal front, the flagship measure is a cut to the income tax: the second bracket will drop from 35% to 33% for earnings between €28,000 and €50,000. Additional family-based deductions are also in the works.

Healthcare funding will rise by up to €3 billion, largely earmarked for new hires and wage increases, with 27,000 new positions planned, especially for nurses. For businesses, Minister Urso has promised a fresh incentive scheme to replace the troubled “Transition 5.0” program, while confirming expanded support for special economic zones.

The DPFP will be debated in Parliament on October 9 before being sent to Brussels. While growth forecasts are slightly lower than six months ago, reaching the 3% deficit target already in 2024 is seen as a sign of fiscal discipline.