By Giuseppe Fonte

ROME (Reuters) - Italy's government on Thursday called a vote of confidence in parliament on its deficit-cutting 2025 budget, a way of speeding up its approval to ensure the package becomes law by an end-year deadline.

The budget aims to lower next year's fiscal deficit to 3.3% of gross domestic product (GDP) from a targeted 3.8% in 2024, while cutting taxes for low and medium income brackets.

The confidence vote will be held on Friday in the Chamber of Deputies, where Prime Minister Giorgia Meloni has a comfortable built-in majority. The bill will then move to the upper house Senate next week for final approval.

Italy, which is under European Union orders to slash its deficit after huge overshoots in 2022 and 2023, has pledged to bring it below the EU's 3% of GDP ceiling in 2026.

However the public debt, proportionally the second highest in the euro zone, is projected by the government to rise through 2026 due to the delayed effect of costly state subsidies for energy saving building work - the so-called "superbonus".

The debt is forecast by the Treasury to climb from 134.8% of GDP last year to 137.8% in 2026, before marginally declining.

The euro zone's third largest economy has stagnated in recent months, and growth this year is now seen coming in at around half of the government's official 1% target.

The slowdown may have been even sharper but for the regular arrival in Rome's coffers of tens of billions of euros from the European Commission under the EU's post-COVID-19 Recovery Fund.

Meloni's third budget bill widens next year's deficit to 3.3% of GDP from an estimated 2.9% based on current trends, borrowing an extra 9 billion euros ($9.37 billion) to fund tax cuts and some other expansionary measures.

An additional 4 billion euros will be raised next year through temporary changes to tax rules for banks and insurers.

As part of last-minute changes approved in parliament, the government will leave taxation on cryptocurrency capital gains unchanged at 26% next year and raise it to 33% in 2026, scaling back its previous plans to hike the levy to 42%.

($1 = 0.9609 euros)

(Reporting by Giuseppe Fonte, graphics by Stefano Bernabei, editing by Gavin Jones)