The 2025 Budget Law has introduced significant changes regarding tax deductions for building renovation expenses.Here is a summary of the main updates

Deduction Rates and Spending Limits

• Primary Residence: For expenses incurred in 2025, the deduction is 50%, spread over 10 years, on a maximum of €96,000 per residential unit used as a primary home.
• Other Properties:For expenses incurred in 2025, the deduction is 36% on a maximum of €96,000 per residential unit.

Deduction Limitations Based on Income and Number of Dependent Children
For taxpayers with a total income exceeding €75,000, maximum limits on tax deductions have been introduced. These limits are calculated by multiplying a base amount by a coefficient determined by the number of dependent children.

• Base Amounts
  • €14,000 for incomes between €75,000 and €100,000.
  • €8,000 for incomes above €100,000

• Coefficients Based on Dependent Children:
  • 0.50: No dependent children.
  • 0.70: One dependent child.
  • 0.85: Two dependent children
  • 1.00: Three or more dependent children, or at least one child with a certified disability under Law 104/1992.

Examples of Maximum Annual Deduction Calculation

• Income between €75,000 and €100,000:
  • No dependent children: €14,000 x 0.50 = €7,000.
  • One dependent child: €14,000 x 0.70 = €9,800.
  • Two dependent children: €14,000 x 0.85 = €11,900.
  • Three or more dependent children or at least one child with a disability: €14,000 x 1.00 = €14,000.

• Income above €100,000::
  • No dependent children: €8,000 x 0.50 = €4,000.
  • One dependent child: €8,000 x 0.70 = €5,600.
  • Two dependent children: €8,000 x 0.85 = €6,800.
  • Three or more dependent children or at least one child with a disability: €8,000 x 1.00 = €8,000.

Relevant Income for Deductions
The total income considered for the application of these limits is the one related to the year in which the deduction is claimed. Therefore, for deductions related to expenses incurred in 2025, the reference income will be that of 2025.
Exclusions from the Limits
The following expenses are excluded from the total amount of costs subject to these limits:

• Medical expenses deductible under Article 15 of Presidential Decree 917/1986, paragraph 1, letter c).
• Amounts invested in startups or innovative SMEs.
• Deductions accrued until December 31, 2024.

Additionally, deductible expenses incurred due to loans or mortgages contracted up to December 31, 2024, are also excluded.

Conclusion
The new provisions introduced by the 2025 Budget Law foresee a reduction in deduction rates for building renovation expenses and the introduction of maximum deduction limits based on income and the number of dependent children. It is essential to carefully evaluate one's income and family composition to determine the actual tax benefit available.