Italy (IT)
Italy is a parliamentary republic of 20 regions stretching from the Alpine peaks of the Dolomites to the sun-baked coasts of Sicily and Sardinia, celebrated worldwide for its unparalleled Renaissance art and architecture, UNESCO-laden historic cities from Rome to Florence and Venice, world-defining cuisine and wines, passionate football culture, and a relaxed Mediterranean lifestyle that has drawn expats, artists, and retirees for centuries.
Tax & Payslip Guide
Understanding your taxes in Italy — tax year 1 January – 31 December.
📊 Income Tax Brackets
| Income from | Income to | Rate | Notes |
|---|---|---|---|
| 0 | 28,000 | 23% | First bracket (IRPEF 2026 reform). Personal allowance (no-tax area): €8,500 for employees; €5,500 for pensioners; €5,500 for self-employed. The 2024 IRPEF reform consolidated the former 25% bracket (€15,001–28,000) into the 23% bracket. |
| 28,000 | 50,000 | 33% | Second bracket — reduced from 35% to 33% by the 2026 Budget Law (Legge di Bilancio 2026). Applies to income between €28,001 and €50,000. |
| 50,000 | ∞ | 43% | Top bracket. Applies to income above €50,000. Regional (addizionale regionale: 1.23–3.33% depending on region) and municipal surcharges (addizionale comunale: 0–0.9%) are added on top of state IRPEF. Total effective marginal rate in high-tax regions: 46–47%. |
🏛️ Social Contributions
For those without other INPS coverage. Rate drops to 24% if the contributor has other mandatory pension coverage (e.g. concurrent pensioner or employee).
Main employee and employer INPS contributions on gross salary. Includes pension (IVS), unemployment (NASPI), sick leave (malattia), maternity. Contribution ceiling (massimale): €119,650/year (2026). INPS contribution number (matricola) assigned automatically.
Employer-only contribution for occupational accident insurance. Rate varies by sector risk classification. Obligatory for all employers.
Fixed quarterly payments to INPS. Minimum annual contribution: ~€3,836/year. Income above the minimum contributes at the standard rate. Self-employed non-professionals register here.
Regulated professions (avvocati, medici, ingegneri, architetti, commercialisti, notai, giornalisti) have separate pension funds (Casse). All regulated professional invoice must add a 4% "cassa previdenziale" contribution, paid by the client, declared quarterly.
Additional surcharge on top incomes, subject to annual budget law confirmation. Not a permanent structural rate.
🛒 VAT Rates
Italy has four IVA (Imposta sul Valore Aggiunto) rates: 22% standard, 10% reduced, 5% (certain social/health), 4% super-reduced. Some medicines and medical devices are exempt or 5%. No equivalent to Canary Islands IGIC — IVA applies uniformly nationwide.
🧾 Sample Payslip Decoder
🌍 Special Expat Tax Rules
Regime Impatriati (Impatriates' Regime — Art. 16 DLgs 209/2023, reformed 2024): new tax residents (not resident in Italy in the preceding 3 years) who transfer tax residence to Italy and commit to stay for at least 4 years receive a 50% exemption on Italian-source employment and self-employment income (70% exemption in depressed areas: Abruzzo, Molise, Calabria, Campania, Basilicata, Sicily, Sardinia, Puglia) for 5 tax years, renewable under certain conditions. Maximum taxable base exempted: €600,000/year. Requires Italian Codice Fiscale and tax residence transfer declaration. Not available to those who were previously resident in Italy in the last 3 years. | Regime Agevolato per Pensionati Esteri al Sud (7% Flat Tax for Foreign Pensioners): pensioners resident abroad who transfer to a qualifying southern Italian municipality (comuni del Mezzogiorno with <20,000 inhabitants in Abruzzo, Molise, Basilicata, Campania, Calabria, Sicily, Sardinia, Puglia, and from 2020 also Umbria and Marche comuni under 20,000 inhabitants) pay a flat 7% tax on all foreign-source income for 10 years. Requires not having been Italian tax resident in the past 5 years. One of the most favourable retirement tax regimes in Europe.
📋 Double Tax Treaties
Italy has over 90 double-taxation treaties (convenzioni contro le doppie imposizioni), including with the USA, UK, Germany, France, Switzerland, Netherlands, Australia, Canada, Japan, India, China, UAE, Brazil and all EU states. Italian-US treaty covers both income tax and estate tax. Check the Agenzia delle Entrate website for the full list and specific treaties.
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