The Italian government led by Giorgia Meloni has decided to suspend the payment of the annual car tax in 2027 for millions of vehicle owners. The measure applies to cars with a maximum power of 80 kW and to motorcycles, although only one vehicle per owner can benefit from the exemption.
The decision has already triggered a political debate over its cost, its financing and the fact that the measure is initially limited to 2027. Here is what the new rules mean and how much the government will have to spend to compensate Italy’s regions for the lost revenue.
Contents
Meloni’s decision with Giorgetti, Salvini and Tajani
The measure was approved by the Italian Council of Ministers on 16 September 2026, as part of a decree aimed at providing economic support and addressing the effects of higher fuel costs. Prime Minister Giorgia Meloni presented the measure alongside Economy Minister Giancarlo Giorgetti and Deputy Prime Ministers Matteo Salvini and Antonio Tajani.
Meloni described the car tax as one of the taxes most disliked by Italians and said the government’s objective is eventually to make the exemption permanent, rather than limiting it to 2027. The government intends to address this issue through the next budget law.
Under the new rules, in 2027 the tax will not have to be paid on a person’s first car with a maximum power of 80 kW, equivalent to roughly 109 horsepower. The exemption also applies to the first motorcycle owned, regardless of its power. There is no income or ISEE requirement. If someone owns several vehicles that meet the requirements, only one can benefit from the exemption. For cars and motorcycles, the rules also establish which vehicle qualifies when the owner has more than one eligible vehicle.
How many vehicles and people are involved?
The numbers show the scale of the measure. According to the Italian Ministry of Infrastructure and Transport, Italy has 34,868,580 vehicles with power of up to 80 kW. The number of people who own at least one vehicle within this category is 24,608,867.
The distinction is important. The number of eligible vehicles is considerably higher than the number of potential beneficiaries because the exemption can be used for only one vehicle per person. The government estimates that approximately 14.3 million vehicles will actually benefit from the exemption, including cars and motorcycles. The measure therefore covers a large part of the Italian vehicle fleet, particularly smaller and medium-sized cars.
The 80 kW threshold is based on engine power rather than engine size. This means that the measure can cover many of the small and medium-sized cars commonly used by Italian households. It can apply to petrol, diesel and eligible hybrid vehicles, subject to the specific rules concerning how power is calculated.
The potential beneficiaries are spread across the country. The MIT estimates, for example, around 3.92 million potential beneficiaries in Lombardy, but also 2.46 million in Lazio, 2.24 million in Campania, 2.17 million in Sicily and 1.92 million in Veneto.
How much does the car tax cost and who will pay for the exemption?
The Italian car tax, known as bollo auto, is not a single nationwide amount. It is a regional tax, and the amount paid by an individual vehicle owner depends mainly on the vehicle’s power, environmental classification, type of vehicle and the region in which the owner lives.
For this reason, there is no single figure that can be described as the cost of the car tax in 2026. For a typical car below the 80 kW threshold, however, the annual payment generally amounts to several dozen euros or slightly more than euro 100, depending on the vehicle and region. Motorcycle rates are also determined according to the applicable regional rules.
The more important figure is the total amount of revenue that the regions will lose. The decree establishes that the Italian state will transfer euro 2.2935 billion in 2027 to the regions and autonomous provinces to compensate them for the reduction in car-tax revenue.
A substantial part of the funding, euro 1.698 billion, comes from savings identified in connection with Italy’s National Recovery and Resilience Plan (PNRR). The remaining resources come from a series of adjustments and reductions involving appropriations across several government departments. The euro 2.2935 billion figure is therefore the government’s official financial estimate for the 2027 measure. It should not be confused with the much larger amount that a complete abolition of the car tax for all vehicles would require.
What have government and opposition leaders said?
The government has presented the measure primarily as a tax reduction for millions of Italian families. Meloni has stressed her intention to make the exemption permanent, while Salvini has highlighted the number of ordinary cars that would fall below the 80 kW threshold.
The measure has also triggered criticism from several regional governments, particularly those controlled by opposition parties. Tuscany Governor Eugenio Giani, for example, criticised the decision and questioned the impact of the measure on regional finances. Other regional presidents have focused on whether the compensation provided by the state will fully cover the loss of revenue.
Opposition politicians have also focused on the timing of the measure. Some have described it as an electoral initiative because the exemption begins in 2027, when Italy is expected to hold its next general election. Green and Left Alliance politician Angelo Bonelli, for example, described the measure as an electoral handout, while other opposition figures have similarly linked the timing to the upcoming election. The government’s position is different: Meloni and Giorgetti have presented the measure as the beginning of a possible structural reduction in the tax burden, with future budget laws expected to provide the resources needed to maintain it.
Why 2027 matters for Meloni’s budget strategy
The timing of the measure is particularly significant because the exemption is currently limited to 2027. This is also the year in which Italy is expected to hold its next general election. That coincidence has naturally become part of the political debate, but it does not by itself establish that the measure was introduced for electoral purposes.
There is, however, a documented element concerning the government’s broader budget strategy. Italy’s 2025 Budget Law included substantial spending reviews and reductions in existing appropriations. According to the Italian Senate’s analysis, the measures generated net resources of approximately euro 4 billion in 2025, €3.2 billion in 2026 and €1.1 billion in 2027, largely through reductions or adjustments to current expenditure.
The car-tax exemption fits into a broader context of spending reviews, budget adjustments and the search for resources ahead of the 2027 Budget Law. In the specific case of the car tax, the government has already identified the immediate funding: euro 2.2935 billion for 2027, including euro 1.698 billion from PNRR-related savings.
The crucial question will therefore come later. If the government turns the temporary exemption into a permanent tax cut, it will have to find a new source of funding in future budgets every year. For 2027 alone, the cost is already estimated at more than euro 2.3 billion.
