Italy Income Tax 2026: IRPEF Rates, Brackets & How to File
How much tax do you pay in Italy in 2026? See the 3 IRPEF brackets (23–43%), social security rates, key deductions, and filing deadlines. Updated for the 2026 Budget Law.
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Who Pays Tax on Worldwide Income
Italy considers you a tax resident if you are registered in the municipal register (anagrafe) or have your domicile or habitual abode in Italy for more than 183 days during the year. Residents pay IRPEF on all income, wherever earned. Non-residents pay only on Italian-source income. Italy has double taxation agreements with 90+ countries to prevent being taxed twice.
Registered in the anagrafe (civil registry) — automatic residency
Domicile or habitual abode in Italy for 183+ days
Residents: worldwide income taxable under IRPEF
Non-residents: Italian-source income only
90+ double taxation treaties reduce overlap with foreign taxes
IRPEF Income Tax Brackets 2026
| Annual Taxable Income | Tax Rate | Tax on This Band |
|---|---|---|
| Up to €28,000 | 23% | Up to €6,440 |
| €28,001 – €50,000 | 33% | Up to €7,260 (was €7,700 at 35%) |
| Above €50,000 | 43% | 43% on every euro over €50,000 |
For income above €50,000 the fixed tax on the first €50,000 is €13,700 (down from €14,140 before the 2026 reform). Taxpayers earning over €200,000 have certain deductions reduced by €440 — this neutralises the rate-cut benefit at the top.
No-Tax Area (No Tax Zone) 2026
Effective tax-free threshold for employees
Key Tax Deductions and Credits 2026
Employment Tax Credit (Detrazione Lavoro Dipendente)
Maximum €1,955 per year for employees earning up to €15,000. The credit scales down progressively as income rises and reaches zero above €50,000. Applied automatically by your employer in each payslip — you do not need to claim it separately.
Dependent Spouse Credit
Up to €690–800 per year if your spouse earns less than €2,840.51 annually. The amount reduces as your income rises. Claimed in the annual tax return or flagged to your employer.
Dependent Children Credit
A credit of €950 per child applies for children aged 21 and over who earn less than €4,000 per year. Children under 21 are covered by the state Assegno Unico universal child allowance paid by INPS — not via an IRPEF deduction. The credit scales with the number of dependents.
19% Deductible Expenses (Oneri Detraibili)
Mortgage interest, healthcare, education, gym fees, and insurance premiums qualify for a 19% tax credit. From 2026, taxpayers earning over €75,000 face a spending cap on these deductions calculated using a coefficient based on the number of dependent children (0.50 for no children, up to 1.00 for three or more). Taxpayers over €200,000 face an additional flat €440 reduction.
Social Security Contributions (INPS)
Employee and Employer Rates
Employees pay approximately 9.19–10.49% of gross salary to INPS, covering pension, unemployment, sick leave, and other social benefits. The exact rate depends on the sector, company size, and job category. Employers pay a further 30–35% on top of gross salary. The social security earnings cap (massimale contributivo) was €120,607 in 2025; the 2026 figure is set by INPS. Above the cap, only a minor ~5% employer contribution applies. Self-employed on the Gestione Separata scheme pay 33.72–35.03% entirely from their own pocket.
Social Security at a Glance 2026
| Category | Employee Rate | Employer Rate | Notes |
|---|---|---|---|
| Employees (standard) | ~9.19% | ~30–35% | Varies by sector and CCNL collective agreement |
| Executives (dirigenti) | 9.19% up to €55,448; 10.19% above | Varies | Additional funds (Mario Negri, PREVINDAI, FASI) apply |
| Self-employed (Gestione Separata) | 33.72–35.03% | 0% (self-pay) | Full rate borne by freelancer |
| Self-employed (Artisans/Traders) | Fixed minimum + variable | 0% | Min. ~€4,427/year; extra 1% above €55,008 |
INPS contributions are always calculated on gross salary. Tax incentives such as the Regime Impatriati reduce IRPEF but do NOT reduce INPS contributions, which stay on full gross pay.
Capital Income and Investment Taxation
Flat 26% Rate on Most Investment Income
Most investment income — dividends, interest, and capital gains from shares, bonds, and funds — is taxed at a flat 26% substitute tax (imposta sostitutiva), replacing IRPEF. Italian and EU government bonds (BTP, BOT) get a preferential 12.5% rate. Short-term rental income from a second property is taxed at 26% flat (cedolare secca); the first rental property remains at 21%. Crypto gains are taxed at 33% from 2026 (up from 26% previously). Italian banks and brokers withhold the tax automatically on domestic accounts.
Dividends and share capital gains: 26% flat
Interest on bank deposits and bonds: 26% flat
Italian / EU government bonds (BTP, BOT): 12.5% preferential rate
Short-term rental (first property): 21% cedolare secca
Short-term rental (second property from 2026): 26%
Crypto assets: 33% (no €2,000 exemption from 2026)
Real estate sold within 5 years: 26% or progressive IRPEF
Special Tax Regimes
Regime Forfettario — Flat Tax for Small Businesses
The Regime Forfettario replaces IRPEF and IRAP with a single 15% substitute tax (5% for the first 5 years of a new business). Open to self-employed individuals and sole traders with annual revenue below €85,000. No VAT charged to clients. Social contributions still apply. Income is calculated by applying a sector-specific profitability coefficient to gross revenue — not actual profit.
Revenue cap: €85,000 per year
Tax rate: 15% (or 5% for new businesses in first 5 years)
No IRPEF, no IRAP, no VAT obligations
INPS contributions still due at normal Gestione Separata rates
Cannot deduct actual expenses — fixed coefficient applies
Impatriati Regime — Tax Break for Workers Moving to Italy
Foreign workers (or Italians returning after 3+ years abroad) who become Italian tax residents can exempt 50% of employment or self-employment income from IRPEF for 5 years. Those who buy a home in Italy or have dependent children extend the benefit to 10 years. Employees must stay with Italian employer for 2+ years. The regime does not reduce INPS contributions.
50% income exemption from IRPEF for 5 years
Extension to 10 years with Italian home purchase or dependent children
Applies to employment, self-employment, and business income
Must not have been resident in Italy for 3 prior years
INPS contributions calculated on full gross salary — no reduction
Flat Tax for New High-Net-Worth Residents
New residents who have not lived in Italy for 9 of the prior 10 years can pay a €300,000 annual substitute tax on all foreign-source income (raised from €200,000 by the 2026 Budget Law for new entrants from 1 January 2026). Each family member who joins pays €50,000 (raised from €25,000). The regime lasts up to 15 years. Italian-source income is still taxed under normal IRPEF rules.
Annual flat tax on foreign income: €300,000 (up from €200,000 from Jan 2026)
Each family member: €50,000 flat tax
Valid for up to 15 years
Must be non-resident for at least 9 of prior 10 years
Italian income taxed normally under IRPEF
Regional and Municipal Surcharges
Addizionale Regionale and Addizionale Comunale
On top of national IRPEF, every Italian resident also pays a regional surcharge (addizionale regionale) between 0.70% and 3.33%, and a municipal surcharge (addizionale comunale) between 0% and 0.9%. The exact rates vary by region and municipality and can change each year. For residents in major cities like Rome or Milan, total effective tax rate can approach 47% for higher earners. The 2026 Budget Law allows regions and municipalities to keep applying the old four-bracket structure for their surcharges, rather than being forced to use the new three-bracket IRPEF system.
Regional surcharge: 0.70%–3.33% depending on region
Municipal surcharge: 0%–0.9% depending on municipality
Withheld by employer along with IRPEF each month
Settled in full in next year's payroll (11 monthly instalments)
Effective top rate in high-surcharge areas can reach ~47%
Tax Filing and Deadlines
Modello 730 vs Modello Redditi PF
Employees and pensioners with straightforward income use the simplified Modello 730. The pre-filled version (730 precompilato) is available from April 30 on the Agenzia delle Entrate portal (agenziaentrate.gov.it). Any tax owed or refunded is handled automatically through your payslip. Self-employed workers, non-residents, and anyone with foreign assets or a VAT number (partita IVA) must use the Modello Redditi Persone Fisiche (PF). Payments — including balance and first advance — are due by June 30 using the F24 form.
Modello 730 deadline: 30 September 2026
Modello Redditi PF deadline: 31 October (or 2 November if 31 Oct falls on a weekend)
Pre-filled 730 available from 30 April on agenziaentrate.gov.it
Tax payments due by 30 June via F24 form
Late filing within 90 days: minor penalty applies
After 90 days: return treated as omitted — higher penalties
2026 Key Changes (Budget Law No. 199/2025)
Middle Bracket Rate Cut: 35% → 33%
The second IRPEF rate for income between €28,000 and €50,000 drops from 35% to 33% from 1 January 2026. Maximum annual saving: €440 (2% × €22,000). About 70% of Italian workers earn below €28,000 and see no change from this specific measure.
Deduction Cap for High Earners
Taxpayers over €75,000 face a new ceiling on 19% deductible expenses based on income and number of dependent children. Those over €200,000 have deductions cut by a flat €440 — which offsets the rate reduction they gained.
New Resident Flat Tax Rises to €300,000
New residents moving to Italy from 1 January 2026 pay €300,000 per year on foreign income (up from €200,000). Each family member pays €50,000 (up from €25,000). Existing regime holders keep their current rate until their 15-year period ends.
Crypto Tax Rate Rises to 33%
Capital gains on crypto assets are taxed at 33% from 2026 (up from 26%). The previous €2,000 annual exemption is abolished. Euro-pegged stablecoins may qualify for a lower 26% rate under specific conditions.
Meal Voucher Exemption Raised to €10
Electronic meal vouchers (buoni pasto elettronici) are tax-free up to €10 per working day in 2026, up from €8. Paper vouchers remain tax-free to €4. Saves employees roughly €250–500 per year if they use the full amount.
Productivity Bonus at 1% Tax
Variable bonuses tied to productivity targets are taxed at just 1% (down from 5%) for 2026 and 2027, up to €5,000 per year. Eligible employees must have had gross pay below €80,000 in the prior year.
Frequently Asked Questions
What is the income tax rate in Italy for 2026?
Italy uses 3 IRPEF brackets in 2026: 23% on income up to €28,000; 33% on income from €28,001 to €50,000 (reduced from 35% by the 2026 Budget Law); and 43% on income above €50,000. On top of national IRPEF, you also pay regional surcharges of 0.70–3.33% and municipal surcharges of up to 0.9%.
What is the no-tax area in Italy for employees in 2026?
Employees effectively pay zero IRPEF on income up to €8,500 per year. This is not a formal zero-rate bracket but the result of the €1,955 employment tax credit (detrazione per lavoro dipendente), which offsets the 23% IRPEF at that level. Pensioners have the same €8,500 no-tax area.
How much are social security contributions in Italy in 2026?
Employees pay roughly 9.19–10.49% of gross salary to INPS. Employers pay a further 30–35% on top. Self-employed workers on the Gestione Separata scheme pay 33.72–35.03% themselves. The exact employee rate depends on sector and collective agreement.
What is Regime Forfettario and who qualifies?
The Regime Forfettario is a flat-tax scheme for self-employed individuals and sole traders with annual revenue under €85,000. It replaces IRPEF and IRAP with a single 15% tax (5% for new businesses in their first 5 years). VAT is not charged to clients. INPS social contributions still apply at normal rates.
What is the IRPEF 2026 change and who benefits?
The 2026 Budget Law cut the second IRPEF bracket rate from 35% to 33% for income between €28,000 and €50,000. The maximum saving is €440 per year (2% on up to €22,000 of income in that band). Only employees and self-employed earning between €28,000 and €50,000 feel the full benefit. Earners over €200,000 have deductions reduced by €440 to neutralise the gain.
How do I file my Italian tax return in 2026?
Employees and pensioners use the Modello 730. The pre-filled version is available from April 30 at agenziaentrate.gov.it. File by September 30. Self-employed, non-residents, and anyone with foreign assets or a VAT number use the Modello Redditi PF, due by October 31. Taxes are paid via the F24 form by June 30.
How are expats and foreign workers taxed in Italy?
Tax residents pay IRPEF on worldwide income. Workers who move to Italy can apply for the Impatriati regime, which exempts 50% of income for 5 years (extendable to 10). High-net-worth new residents can pay a €300,000 annual flat tax on foreign income instead of standard IRPEF. Non-residents pay only on Italian-source income.
What is the capital gains tax rate in Italy?
Most capital gains — shares, bonds, investment funds — are taxed at a flat 26% substitute tax. Italian and EU government bonds are taxed at a preferential 12.5%. Crypto gains are taxed at 33% from 2026. Real estate sold within 5 years of purchase is taxed at 26% flat or progressive IRPEF rates. After 5 years, gains on a primary residence are generally exempt.
Calculate Your Italian Income Tax
Estimate your IRPEF, social contributions, regional and municipal surcharges, and net take-home pay with 2026 rates. All deductions and special regimes included.