Retirement Pension: the tax deduction limit increases to 5,300 euros

The 2026 Budget Act increases tax benefits for supplementary pensions and sets new rates for split annuities.

Pension funds: tax deduction limits increase to 5,300 euros

The 2026 Budget Law increases tax benefits for supplemental pensions and sets new rates for split annuities.

Supplementary pension provisions are made easier thanks to the innovations introduced by the 2026 budget law into the tax system.The law establishes an increase in the upper limit of contributions that savers can deduct from taxable income.We move from the old historical limit of 5,164.57 euros to the new quota of 5,300 euros.This change is not only a monetary update, but also an addition to the general allowance. Defines a general rule for all taxpayers who choose to invest in a pension fund.The innovation will officially come into effect on January 1, 2026, which guarantees that the benefit will be applied for the entire tax period.The legislator aims to promote social security savings through stronger financial leverage that will allow the tax base of Irpef to be significantly reduced than before.By understanding how to use this new limit, you can allow yourself to increase your annual tax burden immediately and legally.

The new tax limit comes into effect from 1 January 2026

The increase of the deduction limit to 5,300 euros takes effect immediately with the beginning of the new year.Assogestioni, circular no. 11 of March 15, 2026, clarifies a technical point regarding the effective date of the reform.Although the budget law (law no. 199/2025) generally indicates July 1, 2026 as the deadline for the effectiveness of various provisions, a different rule applies to pension funds.The specific amendment of Article 8, Paragraph 4 of the Supplementary Pension (Legislative Decree no. 252/2005) prevails over the general rule.This choice corresponds to the principle of the unity of the tax period: taxes and related deductions are calculated during the calendar year.If the limit were to change in the middle of the year, management confusion would be created for the withholding agents and the taxpayers themselves.Therefore, all payments made in 2026 would already be higher are benefited from the threshold.

Increased help for first-time workers

The system recognizes another advantage for those who started work in 2007.after January 1.Those persons have a privileged regime that allows to return unpaid fees during the first five years of membership in the pension fund (paragraph 6 of Article 8 of Legislative Decree No. 252/2005).The reform adjusts the calculations to a new limit of 5,300 euros.If the employee does not use up the amount of deduction in the first five years, then he can apply the remaining part in the next twenty years.The annual maximum limit for the "additional deduction" is equal to half of the normal limit, i.e. €2,650.

To give a practical example:

A young employee who is entitled to reimbursement can deduct a daily allowance of €5,300 per year;

to this he can add another 2,650 euros, withdrawn from the balance of the "premium";

So the total amount that can be deducted from taxes is 7,950 euros per year.

This possibility also applies to those already registered on January 1, 2026, the law not providing for a specific transitional regime for this category.

New tax rules for payments and annuities

The reform also introduces new ways to accumulate what has been accumulated over time, and offers an alternative to the classic pension.We are talking about annuities for a fixed period, free withdrawals or split payments.In the case of these benefits, the state implements different tax systems that savers should be familiar with.In the case of annuities for freely chosen periods and withdrawals, the fund applies a withholding tax of 15%.This rate decreases by 0.30% for every fifteen years of participation in the fund, until reaching a minimum of 9%.

However, if the employee chooses to pay less, the tax rate will be higher:

basic maintenance tax from 20%;

The reduction will be 0.25% each year after the 15th year.

The maximum discount cannot exceed 5%, bringing the minimum rate to 15%.

These differences are necessary to ensure the accuracy of the income and to enable the pension fund to function properly as a tax deduction agent at the time of payment.

Additional cash management prior to January 2007

A fundamental technical aspect concerns the protection of old savings for those who have been registered for a supplementary pension for many years.Assogestioni emphasizes that the transitional regime must apply to employees who were already employed by pension funds before January 1, 2007 (Legal Decree No. 252/2005).This means that the new taxes established in the 2026 budget only affect the part of the capital accumulated since 2007. Amounts set aside in the past continue to operate according to the tax rules of that time, which are sometimes different from the current ones.This separation of financial "containers" serves to avoid penalizing historical depositors and ensures that the new withdrawal rules will only be applied proportionally.The pension fund is tasked with dividing the total amount according to the payment dates in order to apply the correct source deduction according to the existing law in each period.