Module 120 min2054 wordsFree — no account
Deductions and tax credits: where each one enters the IRPEF calculation
The module’s worked examples, then cases to attempt before revealing their solution · 3 sections · 249 words · 3 min
Worked example
A deduction straddling two bands
Paolo declares €28,500 and deducts €1,000. The first €500 brings him from €28,500 down to €28,000 and removes income taxed at 33 percent: €165. The other €500 falls below the limit and removes income taxed at 23 percent: €115. His total saving is €280, not €330.
Worked example
A credit partly wasted
Elena has gross tax of €1,200 and employment-income credits of €1,050. She pays €2,000 of expenses credited at 19 percent, worth €380. Her total credits reach €1,430 against €1,200 of tax: net tax drops to zero and €230 of credit is lost for good.
Practical case
Marco weighs two €1,500 expenses
Marco is an employee with total income of €45,000 in 2026 and plenty of gross tax. He has to choose between two expenses of the same size, €1,500: one is a deductible charge, the other is credited at 19 percent. How much tax does each save him, and which is better purely from a tax point of view?
Hint: Ask which band the last €1,500 of his income sits in, and whether the deduction takes him below a limit.
Show the solution
With the deduction his taxed income falls from €45,000 to €43,500: the whole €1,500 stays inside the second band, taxed at 33 percent, so the saving is €1,500 × 33% = €495. With the credit the saving is €1,500 × 19% = €285, easily absorbed by his gross tax. On tax grounds alone the deductible expense is worth €210 more.
Answer: €495 against €285: the deductible expense wins
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