Published by Global Banking & Finance Review®
Posted on October 20, 2025
2 min readLast updated: January 21, 2026
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Italy plans to end the tax break on short-term rentals, raising the tax rate to 26%. The proposal faces opposition and could impact middle-class homeowners.
By Alvise Armellini and Giuseppe Fonte
ROME (Reuters) -Italy's government is planning to end a tax break on short-term rentals as part of measures contained in its 2026-2028 budget law, a draft showed on Monday.
Short-term rentals are widespread in a tourist hotspot such as Italy, but they are also politically sensitive against a backdrop of Europe-wide protests against overtourism.
Landlords earning income from short-term rentals currently face a 26% tax, but can claim a reduced rate of 21% on one of their properties.
The differentiated tax regime was introduced two years ago by Prime Minister Giorgia Meloni's rightist administration, which is now seeking to impose a single 26% tax band.
However, Forza Italia, one of the parties within Meloni's coalition, has vowed to oppose the measure, which faces criticism from industry representatives.
Scrapping the reduced tax "is a profoundly mistaken choice", Forza Italia spokesperson Raffaele Nevi said on Sunday, complaining that his party was not consulted about the proposal.
Economy Minister Giancarlo Giorgetti did not mention the taxation change when he presented the budget plans on Friday, which are detailed in a 110-page document seen by Reuters.
Marco Celani, head of short-term rentals association Aigab, said the tax hike would penalise mostly middle-class homeowners and encourage tax evasion through off-the-book rentals.
The proposal is a "stunning own goal," Aigab said in a statement.
Details on the projected tax take from the increase have not yet been made public.
The budget is due to be discussed and voted by parliament in the coming weeks before a final approval expected around the end of December.
During the process, the proposed legislation is usually subject to changes.
Italy is a relatively high-tax country, with an average tax burden last year of 42.5% of gross domestic product, but with lower rates on some form of income, including from property.
Critics say the system, which includes very low taxes on inheritance, is skewed towards the wealthy, while middle earners face higher taxes and social security contributions.
(Reporting by Alvise Armellini and Giuseppe Fonte, editing by Keith Weir)
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