Italian Flat Tax: Increase to €300,000 Planned for 2026
October 2025: the 2026 Budget Bill proposes raising Italy's flat tax for new residents to €300,000 a year and €50,000 per family member, for moves from 2026.
Italy’s flat tax for new residents is about to become more expensive again. The 2026 Budget Bill, now before Parliament, proposes to raise the annual substitute tax on foreign income from €200,000 to €300,000, and the amount for each family member from €25,000 to €50,000.
The regime would keep the same structure and the same benefits; the change concerns its price, and only for people who move from 2026. This article explains the proposal, the history of the regime, who would be affected and what the proposal means for anyone planning a move.
Three Prices in Nine Years
The regime was introduced by Law 232/2016 and became available from 2017 at €100,000 a year. Decree-Law 113/2024 raised it to €200,000 for people transferring their residence after 10 August 2024, leaving the family amount unchanged. If the Budget Bill is approved as presented, a third version would apply from 2026.
What the Proposal Says
The Budget Bill amends article 24-bis of the Income Tax Code. For individuals who transfer their residence to Italy from the date the law enters into force, expected to be 1 January 2026, the substitute tax would be €300,000 for each year of the option and €50,000 for each family member included. As in 2024, the reference appears to be the transfer of residence under the Civil Code, the place of habitual abode, rather than the tax year in which the option is exercised.
People who were already flat tax residents, and people who transfer their residence by 31 December 2025, would keep the amounts in force at the time of their move for the whole duration of the regime, up to fifteen years.
What Would Not Change
The proposal does not touch the structure of the regime. The flat tax would continue to replace Italian income tax on all foreign income and gains, with the exception of gains on qualifying shareholdings in the first five years. Holders would remain exempt from reporting foreign assets and from Italian wealth taxes on them, outside the rules on controlled foreign companies, and subject to Italian gift and inheritance tax only on Italian assets. The eligibility test, non-residence in nine of the previous ten years, and the fifteen-year maximum duration would also stay the same.
Why Another Increase?
The Budget Bill does not explain the choice in detail. The increase follows the logic of the 2024 change: the regime has kept attracting wealthy families even at €200,000, which suggests that the price can rise without undermining its appeal, while generating more revenue from each participant. It also continues the shift towards a regime designed for families with very large foreign incomes, rather than for the merely affluent.
The Window Created by the Proposal
Because the higher amounts would apply only to transfers from 2026, the proposal creates a clear dividing line. A family that transfers its residence by 31 December 2025 would pay €200,000, plus €25,000 for each family member, for up to fifteen years. The same family moving in January 2026 would pay €300,000 plus €50,000 each: for a couple, €125,000 more every year.
A transfer of residence is a fact, not a declaration of intent. It requires a home in Italy, the actual move and, in practice, registration with the municipality, which for non-EU citizens also presupposes the right visa and permit. A move rushed only to beat a deadline, without a real transfer of life, risks failing on exactly the point that matters. This is also why the timing of the move within the year deserves separate thought: becoming resident for civil-law purposes in December does not make you Italian tax resident for that year.
Who Would Still Benefit at €300,000
For investment income taxed at 26%, €300,000 corresponds to about €1.15 million of foreign income a year; for income taxed at the top progressive rate of 43% plus local surcharges, the break-even is lower. Above those levels, the regime remains the most predictable option in Europe for foreign income, with the added value of the wealth tax, reporting and inheritance tax exemptions.
How to Prepare
For families who were already planning a move, the questions are practical: can a genuine transfer of residence be completed by the end of the year; is the visa in place, for non-EU citizens; are the past ten years of residence clean, or is an advance ruling advisable; and does the flat tax still make sense at the higher amount if the move slips into 2026. For everyone else, the decision should be taken on the final text of the Budget Law.
Our View
A second increase in little over a year confirms the direction: Italy’s flat tax is becoming a regime for the very wealthy, at a price that remains competitive. If a move was already planned, assess whether a genuine transfer can be completed in 2025; if not, base the decision on the final law and on your real foreign income, not on the deadline.
Frequently Asked Questions
How much will Italy's flat tax be in 2026?
The 2026 Budget Bill proposes €300,000 a year for people who transfer their residence to Italy from 1 January 2026, and €50,000 for each family member. The proposal still has to be approved by Parliament.
Will people already on the flat tax pay more?
Not under the proposal: people who transferred their residence earlier keep the amounts in force when they moved.
What if I move to Italy in December 2025?
Under the proposal, a genuine transfer of residence by 31 December 2025 would keep the current €200,000 and €25,000 per family member.
Does anything else change in the flat tax?
No. The proposal concerns only the amounts; eligibility, duration and exemptions stay the same.
Is the flat tax still worth it at 300,000 euro?
For investment income taxed at 26%, it pays off above about 1.15 million euro of foreign income a year.
Avv. Marco Mesina
Founder, Move to Dolce Vita · Avvocato, Milan Bar (Ordine degli Avvocati di Milano)
Marco is an Italian tax lawyer who advises individuals and families relocating to Italy on tax regimes, residency, citizenship, real estate and succession planning. Before founding Move to Dolce Vita he worked at Watson Farley & Williams, Withers and Deloitte in Milan.
- Milan Bar
- Citywealth Top 50 Italian Advisors 2025 & 2026
- Profiled by Forbes (2024)
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