Italy approves 2027 vehicle tax exemption for cars up to 80 kW and all motorcycles

Tax exemption framework for 2027

The Italian Council of Ministers approved a draft decree that introduces an exemption from the annual vehicle ownership tax starting in 2027. The measure applies to individual car owners as well as taxpayers holding a vehicle under leasing or rental agreements, limited to a single vehicle per person. Eligibility is granted without any income requirements or restrictions tied to the ISEE wealth index. The tax relief covers passenger cars with an engine output of up to 80 kW, equivalent to just over 108 horsepower, alongside all motorcycles regardless of engine capacity. Deputy Prime Minister and Minister of Infrastructure and Transport Matteo Salvini stated that the government plans to work toward extending the power threshold beyond 80 kW in future legislative phases.

Eligible vehicle models and technical criteria

The draft decree covers petrol, diesel, and hybrid vehicles that satisfy the 80 kW power ceiling. Eligible market options include high-volume models such as the Fiat Panda and Fiat 500 with the 51 kW hybrid engine, the 74 kW Fiat 600, the Lancia Ypsilon, and the Jeep Avenger. Several compact crossovers and hatchbacks from Dacia, Renault, Peugeot, Citroen, Opel, and Volkswagen also qualify within the 49 kW to 74 kW power band. Other vehicles exceed the ceiling, such as the 100 kW Alfa Romeo Junior 1.2 Hybrid, although a future base version is expected to meet the threshold. Implementing regulations must still establish whether the 80 kW cap applies solely to the internal combustion engine or to total system power, a determination that directly affects plug-in hybrid vehicles from manufacturers such as Renault and Kia.

Regional revenue impact and state compensation

Regional administrations collect the vehicle tax, and the national government approved 2.3 billion euros in state transfers to compensate regions for the impending drop in revenue. In Piedmont, regional president Alberto Cirio presented regional impact figures during a press conference at the Museo dell'Automobile in Turin alongside regional assessors Andrea Tronzano, Maurizio Marrone, and Matteo Marnati. Cirio reported that 1,636,491 citizens in Piedmont will no longer pay the tax, consisting of 1,416,089 car owners and 220,402 motorcycle owners. The measure represents an estimated revenue reduction of approximately 170 million euros for Piedmont, which will be fully offset by the national allocation fund.

Speaking to reporters in Turin, Cirio outlined the justification for removing the levy on low and medium-power vehicles:

Owning a car is neither a luxury nor a whim, but a tool for life, used for work and for taking children to school. Abolishing this tax is an equitable action.

Territorial distribution across Italian regions

Figures compiled by the Ministry of Infrastructure and Transport illustrate the geographic scale of the measure across Italian regions. In Lazio, over 2.4 million vehicle owners are eligible, covering 2,776,435 passenger cars and 691,747 motorcycles under the 80 kW limit. In Calabria, the decree applies to 806,014 individuals who own 1,044,406 cars and 189,318 motorcycles. Marche includes 727,827 cars and 211,411 motorcycles among more than 663,000 qualifying residents, while Umbria counts 448,929 cars and 99,243 motorcycles across 388,100 owners. In Valle d'Aosta, regional finance assessor Mauro Baccega estimated a revenue reduction of between 6 million and 7 million euros out of 22 million euros in total vehicle tax collections, noting that regional authorities are evaluating direct bank debit options to offer further payment discounts.