Italy approves road tax abolition for small vehicles and tapers diesel fuel discounts

Scope of the vehicle tax abolition

The Italian government approved a structural measure on 16 September 2026 to abolish the annual road tax (bollo auto) starting in 2027 for cars with engine power up to 80 kilowatts and for all motorbikes. Announcing the decision following a cabinet meeting, Premier Giorgia Meloni described the policy as a permanent removal of a property tax on small and medium-powered vehicles, restricted to one vehicle per citizen. According to government estimates, the exemption will cover approximately 70% of Italy's vehicle fleet, representing roughly 30 million cars across segment A city cars, segment B compacts, and small crossover utility vehicles. High-powered segment D vehicles, executive saloons, C-segment sport utility vehicles, and sports cars remain excluded from the relief. For vehicle owners with multiple registrations, the tax exemption applies solely to the car or motorcycle with the lowest engine rating or lowest tax tier, calculated from the engine power listed in field P.2 on the vehicle registration document.

From 2027, one of the most hated taxes by Italians, one of those on property, will be structurally cancelled.

Funding mechanism and fuel excise adjustments

The total revenue shortfall for regional governments resulting from the cancelled road tax is estimated at 2.3 billion euros. The national executive plans to compensate regional and provincial authorities by reallocating unspent funds from the National Recovery and Resilience Plan (PNRR) recorded as of 30 June 2026 that lack legally binding EU reporting commitments, with final regional allocations set for 31 March. Alongside the vehicle tax reform, the cabinet modified its existing fuel excise reduction on diesel fuel. The current 17-cent price reduction, in place until midnight on 17 September 2026, will decrease to 12.2 cents on 18 September. That discount will subsequently halve to 6.1 cents on 26 September before expiring after 5 October 2026.

Coalition positions and regional reactions

Cabinet leaders presented varying perspectives on the tax relief package, with Infrastructure and Transport Minister Matteo Salvini observing that stable economic conditions could permit expanding the exemption above 80 kilowatts and trimming the superbollo luxury vehicle surtax in future budget packages. Foreign Minister Antonio Tajani attributed the initiative to Forza Italia, connecting the decree to long-standing fiscal proposals originally outlined by party founder Silvio Berlusconi in 2008. The president of the Conference of Regions and Autonomous Provinces, Massimiliano Fedriga, issued formal approval of the measure, commending the national government for providing fiscal coverage without burdening regional balance sheets. However, Tuscany Governor Eugenio Giani opposed the decision, arguing that the regional compensation package fell far short of actual tax receipts.

One need only read the decree to realize that, taking Tuscany as an example, the plan provides for a reimbursement of just over 100 million euros, while depriving us of approximately 350 million in revenue.

Opposition criticism and parliamentary responses

Opposition party leaders criticized the timing of the tax abolition ahead of the next general election scheduled for September 2027. Five Star Movement European lawmaker Pasquale Tridico argued that Meloni had previously dismissed his similar regional proposal in Calabria, contrasting his previous focus on middle-class support with what he termed late-legislature campaigning. Più Europa Secretary Riccardo Magi criticized the measure as a diversionary concession that provides minimal relief against persistent energy costs and general inflation. Azione Senator Marco Lombardo contended that implementing the tax cut for an election year risked transferring a 2.3 billion euro financial responsibility to the subsequent government administration. Members of the Democratic Party and the Greens and Left Alliance similarly labelled the announcement an electoral tactic rather than comprehensive tax reform.