The National Assembly passed a bill on 28 November that reverses major portions of an income tax reform adopted earlier this year under the previous government. Most notably, a progressive increase in the general tax relief for all earners has been scrapped and the tax rate for top earners brought back to 50% from 45%.

Under the reform passed in March, the general tax relief was raised from EUR 3,500 to EUR 4,500 this year. However, instead of going up by an additional EUR 1,000 in each of the coming three years to reach EUR 7,500 by 2025, it will now rise by EUR 500 in 2023 to EUR 5,000.

Income tax brackets and tax breaks and reliefs will no longer be automatically adjusted to inflation. This is to be determined each year in the budget implementation act.

However, the additional general tax relief granted to those in the lowest income brackets is being expanded from the annual gross income of EUR 13,716 to EUR 16,000.

A special tax relief is being introduced for young people up to the age of 29, amounting to EUR 1,300 per year.

Tax relief for dependant family members is being raised by about 7.5% in 2023 and 2024 under an amendment sponsored by the opposition New Slovenia (NSi). The party initially sought to raise this relief with its own bill, which was voted down two weeks ago.

Rental income tax is being raised from 15% to 25%, paid from 90% of rental income. Last year a 27.5% tax rate applied to 85% of rental income.

During parliamentary debate, there has been much criticism of the changes to the taxation of self-employed or sole proprietors that pay a flat tax rate.

On the committee the law was corrected with an NSi-sponsored amendment under which expenses of up to 80% of revenue would be deducted for those earning up to EUR 50,000, up from EUR 35,000 proposed by the government.

Despite some of the opposition amendments having been adopted, the SDS delayed the law's passage by filing for a referendum just over a week ago, but the initiative was voted inadmissible by the parliamentary majority. The SDS voted against the bill today, while the NSi abstained.

The opposition protested mainly over the end of a gradual increase in the general tax relief for all earners. "This bill is a step towards lower wages," SDS deputy Suzana Lep Šimenko said, adding that this was unacceptable at a time of such high inflation.

In a similar vein NSi deputy Jernej Vrtovec said it was not the right policy. "It's a reduction of the tax burden that we need," he said.

Finance Minister Klemen Boštjančič has repeatedly described the new personal income tax law as a key measure to maintain fiscal stability in the coming years given how much money the state will likely have to spend to deal with the energy crisis.

The government has promised a more sweeping tax reform to follow next year.