The bill on the state budget for the next fiscal year and the budget for the 2019-2021 period was passed by 313 votes in favour and 70 votes against.
The documents will come into force immediately after being signed by Italian President Sergio Mattarella.
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The state budget abandoned earlier plans to increase added value tax, introduced unconditional basic income and included a provision providing for amending the country's current laws in order to ensure earlier retirement.
Rome spent three months deadlocked with the European Commission over the budget, which Brussels initially criticised, threatening to fine Italy unless the country revised it. The new draft cuts the budget deficit from a planned 2.4 percent to 2.04 percent of GDP.