Italy budget 2027: banks to pay more than €5 billion

What happened. On 28 October Italy's cabinet approved the budget bill for 2027. Meloni told a news conference it is her government's fifth budget and is worth about €26 billion. Per Reuters, it is the last budget before an election due next year.

Who pays. The financial sector, banks and insurers, will provide about €5 billion or more. That includes a higher tax on financial transactions, the so-called Tobin tax. Small cooperative banks get relief through a €90,000 allowance. Gambling firms will provide €700 million. Per Reuters, energy firms will also provide €700 million.

Bank tax rates. Per Reuters, the IRES corporate tax rate rises from 27.5% to 30.5% for banks and from 24% to 27% for insurers. Deputy Economy Minister Maurizio Leo said the tax was designed to avoid hitting banks' capital ratios.

Who gains. The 33% income tax bracket is extended to €55,000 a year, worth up to €500 a year. Pensioners over 75 with a pension up to €28,000 get a €300 voucher. Per Reuters, the self-employed will pay 15% on income up to €100,000, up from €85,000. A new €1 billion cheaper-energy scheme targets small and medium firms.

Deficit. Per Reuters, the deficit is set to reach 3.4% of GDP in 2027, up from 2.9% expected in 2026. Italy will fund about half of the measures through the EU's National Escape Clause, which allows higher deficits for defence and green investment. Ministries will cut spending by about €1 billion.

What we don't know. What parliament changes, and how banks and the bond market react. This is an overview, not a forecast or advice.

Confirmed facts

• Italy's cabinet approved the 2027 budget bill; Meloni said it is worth about €26 billion.^[1][2]
• About €5 billion or more comes from the financial sector, banks and insurers, together with a higher tax on financial transactions; there is a €90,000 allowance.^[1]
• The gambling sector will provide €700 million.^[1][2]
• The 33% income tax bracket is extended to €55,000, with a maximum benefit of about €500 a year.^[1][2]
• Pensioners over 75 with a pension up to €28,000 a year get a €300 social voucher.^[1]
• A new €1 billion Energy Release scheme for small and medium firms; ministries cut spending by about €1 billion.^[1]
• The IRES rate rises to 30.5% from 27.5% for banks and to 27% from 24% for insurers.^[2]
• Energy firms will provide €700 million.^[2]
• The 2027 deficit is targeted at 3.4% of GDP against 2.9% expected in 2026; the EU ceiling is 3%.^[2]
• About half of the measures are funded through the EU's National Escape Clause.^[2]
• The self-employed will pay 15% on annual income up to €100,000, up from €85,000.^[2]
• The tax burden has risen by about 1.5 points to 43% of GDP since late 2022.^[2]

Implications

• ConfirmedItalian banks and insurers will pay more tax in 2027.
• Our readingA deficit above 3% may keep pressure on Italian bonds.
• Our readingItalian banks' after-tax profit may fall, which their shareholders will notice.

Still unknown

• What parliament changes before the final vote.
• Which companies the IRAP tax changes will hit; per Reuters, that is not yet clear.
• How bank shares and Italian bonds react in the 29 October session.

Who it affects

Italy, Europe. People who live or invest in Italy, hold euros, European bank shares or Italian bonds

Sources

1. Governo Italiano, Presidenza del Consiglio dei Ministri: Conferenza stampa del Consiglio dei Ministri 195, l'intervento del Presidente Meloni October 28, 2026 · official
2. Reuters (via Investing.com): Italy approves 2027 budget with tax hikes on banks and energy firms October 28, 2026 · media