Income Tax in Italy: 2026 IRPEF Rates, Brackets and Surtaxes

There is no single Italy tax percentage. Anyone who gives you one number is describing a fragment of the system and leaving out the parts that decide what you actually hand over. The national rates are only the first of three layers, a large share of income never passes through them at all, and above certain income levels the reliefs that are supposed to reduce your bill are themselves capped.

This guide sets out the Italy taxation system for individuals as it stands in 2026: the brackets, the two local surtaxes that almost no English-language source explains properly, what enters the taxable base and what escapes it, the caps that bite at higher incomes, and how all of this changes, and does not change, if you are not Italian.

One point of vocabulary before starting. IRPEF, imposta sul reddito delle persone fisiche, is the Italy personal income tax. It is what people mean by income tax in Italy, and it is the tax this guide is mostly about. It is not the whole of Italian taxation, and knowing where its boundaries fall is most of the battle.

Personal income tax in Italy is charged on the six categories of income listed in article 6 of the consolidated income tax act: land and property income, capital income, employment income, self-employment income, business income, and a residual category called redditi diversi that captures, among other things, most capital gains. A receipt that does not fall into one of these six categories is not income for Italian tax purposes at all.

Residents are taxed on income wherever it arises. Non-residents are taxed only on income produced in Italy. That single distinction, in article 3 of the act, does more work than any rate table.

The tax year is the calendar year, and each year is a self-contained obligation. Which year a payment falls into is decided by the rules of its own income category: cash basis for some, accruals for others. Employment income has a quirk worth knowing: pay relating to one year but settled by 12 January of the next still belongs to the earlier year.

Italy Tax Brackets: 2026 and 2025

The Italy tax brackets changed on 1 January 2026. The second bracket came down from 35% to 33%, under article 1, paragraph 3 of Law 199 of 30 December 2025. The first and third are unchanged.

Both tables below are live, and which one applies to you depends on the year of the income rather than the year you file. Income earned in 2025 and declared in 2026 is taxed at the old rates; income earned in 2026 and declared in 2027 is taxed at the new ones. A great deal of published guidance shows one table without saying which.

What the 2026 Cut Is Actually Worth

Less than the headline suggests. The reduction applies to a band 22,000 euro wide, and two percentage points of 22,000 euro is 440 euro. That is the maximum benefit available to anyone, and everyone earning above 50,000 euro receives exactly it: the same 440 euro whether the income is 60,000 or 600,000. Below 28,000 euro the benefit is nil.

There is a symmetry worth noticing. From the same tax year, taxpayers with total income above 200,000 euro lose 440 euro of tax credits under a provision inserted by the same budget law. Whether the coincidence is deliberate is not something the legislation says.

The Two Surtaxes Nobody Explains

The national rates are not the whole of the income tax rate in Italy. Two local surtaxes are charged on the same taxable base and are added to the IRPEF figure rather than folded into it.

The regional surtax has a base rate of 1.23%, in force since 2011 and applying equally to the special-statute regions and the autonomous provinces. Each region may then increase or reduce it: ordinary-statute regions may add up to 2.1 percentage points, special-statute regions and the autonomous provinces up to 0.5. On top of that sits an automatic mechanism: a region that misses the targets of its healthcare deficit recovery plan has its regional surtax raised by 0.3 points and its IRAP by 0.15, without any regional decision being needed. The practical range is therefore 1.23% to 3.33%.

The municipal surtax is capped at 0.8%. Rome is separately authorised to go to 0.9%. And metropolitan city capitals with a per-capita deficit above 700 euro (Turin, Naples, Reggio Calabria and Palermo among them) may exceed 0.8% altogether, under an agreement with central government running to 2042.

There is a further complication that matters if you try to compute your own liability. For the tax years 2025 through 2028, regions and municipalities are permitted not to align with the three national brackets, and may instead set their surtaxes on the four-bracket structure that applied in 2023. So in the same year, on the same income, you can face three national bands and four local ones.

What This Means in Practice

On 60,000 euro of taxable income, gross national IRPEF for 2026 is 18,000 euro: 6,440 on the first band, 7,260 on the second, 4,300 on the third. That is an effective rate of 30% before any credits. Add the surtaxes and the same income produces somewhere between roughly 18,700 and 20,500 euro depending on where you live, an effective range of about 31% to 34%.

Three percentage points, decided by nothing but your municipality of residence on 31 December. For anyone with a genuine choice about where in Italy to register, that is not a rounding error.

A Note on 2027

A new consolidated income tax act was published on 3 July 2026 as Legislative Decree 117 of 19 June 2026: 377 articles in four parts, replacing the 1986 text with effect from 1 January 2027. It is a reordering and renumbering exercise rather than a rate change: the brackets described above are not affected by it. But article references move, and they move a long way. Guidance that cites the old numbering will not be wrong about the substance, but it will be citing a text that no longer exists.

What Actually Enters the Taxable Base

Between gross income and tax due there are two quite different mechanisms, and confusing them is the most common error in amateur calculations.

Deductible charges, oneri deducibili, are subtracted from total income before the rates are applied. They are worth your marginal rate, so 43 cents in the euro at the top and 23 at the bottom. The main ones are:

• compulsory social security contributions;
• contributions to supplementary pension schemes, deductible up to 5,300 euro from 2026 (raised from 5,164.57);
• maintenance paid to a separated or divorced spouse, but not child support;
• contributions for domestic workers and carers;
• where the main home is not subject to municipal property tax, an amount equal to its cadastral income.

Tax credits, detrazioni, are subtracted from the tax itself, and are worth their face value regardless of your rate. They cover dependants, income type, and a long list of specific expenses at 19%:

• medical costs above a small threshold;
• mortgage interest on the main home, within a cap;
• education;
• insurance premiums;
• funeral expenses.

Most of them now require traceable payment.

Certain income never enters the base at all:

• income subject to separate taxation;
• income taxed at source by way of final withholding or substitute tax;
• child maintenance received under a court order;
• family allowances.

The Cap That Higher Earners Discover Too Late

This is where the Italian system becomes genuinely unusual, and it is almost entirely absent from English-language guidance.

Since 1 January 2025, taxpayers with total income above 75,000 euro face an overall ceiling on the expenditure that can be taken into account for tax credits: not per category, but across almost all of them combined. The ceiling is a base amount multiplied by a coefficient that depends on how many dependent children are in the household.

The base amount is 14,000 euro for total income between 75,000 and 100,000 euro, and 8,000 euro above 100,000. The coefficient is 0.5 with no dependent children, 0.7 with one, 0.85 with two, and 1 with more than two or with at least one disabled child. A childless taxpayer on 150,000 euro therefore has a ceiling of 4,000 euro of qualifying expenditure, irrespective of what they actually spent.

Two features catch people out. The income figure used for the test includes income taxed under the flat rental regime and under the flat-rate regime for the self-employed, even though neither of those is subject to IRPEF. And where a relief is spread over several years, such as renovation works, it is the annual instalment that counts against the ceiling, not the total outlay.

A handful of items sit outside the cap: healthcare expenses, investments in innovative start-ups and SMEs, mortgage interest and insurance premiums under contracts entered into up to 31 December 2024, and reliefs on expenditure incurred up to that date that is spread over later years.

And this is only the first of three layers. They operate cumulatively, in this order:

A taxpayer on 150,000 euro with two dependent children first has qualifying expenditure capped at 6,800 euro, then has the resulting article 15 credits reduced to 75% of their value, and from 2026 loses a further 440 euro. Anyone relying on Italian tax reliefs to model a relocation at that income level, without running all three, will produce a number that is wrong by thousands.

The Income That Never Touches IRPEF

The Italian tax rate quoted in most comparisons is the top IRPEF band, 43%. For many people with capital, it is close to irrelevant, because a great deal of income is removed from IRPEF altogether and taxed at a flat rate instead. Understanding which income sits where matters far more than memorising the brackets.

Rental Income

Residential rents can be taken out of IRPEF by electing the cedolare secca: a substitute tax of 21%, or 10% for controlled-rent contracts in designated municipalities, replacing income tax, the surtaxes and registration duty on the rent. For a landlord in the top band the arithmetic is stark: 21% against a marginal 43% plus surtaxes. The election has costs of its own, principally the loss of the right to index the rent.

Financial Income

Interest, dividends and most capital gains on financial assets are taxed at a flat 26%, either by withholding at source or by substitute tax. Certain government bonds are taxed at 12.5%. From 1 January 2026 gains on crypto-assets are taxed at 33% with no exempt threshold.

The consequence is that Italy taxes labour heavily and capital comparatively lightly. A salary of 100,000 euro attracts a marginal 43% plus surtaxes; a dividend of 100,000 euro attracts 26%.

Foreign Dividends: Where They Land Decides What You Pay

This is the most expensive detail in the whole guide, and it turns on something most people regard as administrative trivia.

Take a foreign dividend of 100,000 euro that has suffered 15% withholding in the source country. If it is collected through an Italian intermediary, the Italian 26% is applied to the amount net of the foreign tax, 85,000 euro, producing 22,100 euro of Italian tax and a total burden of 37,100. If the same dividend is credited directly to an account held abroad, it must be declared and the 26% substitute tax is applied to the gross figure of 100,000, producing 26,000 euro of Italian tax and a total burden of 41,000.

The same dividend, the same taxpayer, the same country of source: 3,900 euro of difference, decided by the account it was paid into.

In neither case is a credit available for the foreign tax, because the income does not enter total income. There is one opening: the Court of Cassation held in 2022, on the basis of the double tax convention with the United States, that a resident could set United States tax against the Italian substitute tax. It is a treaty-specific decision rather than a general rule, and it should be treated as an argument to be made rather than a position to be assumed.

Capital Gains

Gains fall outside IRPEF in most cases, at the flat 26%. Italian residential property held for more than five years is generally exempt; held for less, the gain is taxable. Foreign property follows different rules again. Because the treatment varies so much by asset, this guide does no more than place capital gains within the structure.

The Special Regimes, Briefly

Italy also offers several optional regimes to people who become resident, each replacing ordinary taxation on a defined class of income. The substitute tax for high-net-worth new residents covers all foreign income for an annual amount fixed by statute. A separate regime taxes foreign pensions and other foreign income at 7% for those settling in qualifying smaller municipalities in the south. A third exempts part of employment income for inbound workers. Each is a distinct election with its own conditions, and none of them is covered properly here.

Tax in Italy for Foreigners

There is no separate Italy tax rate for foreigners. Income tax in Italy for foreigners follows exactly the same schedule, the same surtaxes and the same credits as for Italian nationals. There is no expat tax Italy regime as such. What changes about Italy tax for foreigners is not the rate but the base, and the base is decided by residence.

When You Become Resident

You are treated as an Italian tax resident for a year if, for the greater part of that year, any one of the following holds:

The last of these can be rebutted by showing that the registration does not reflect the facts. The others cannot be argued away by pointing at a visa or an employer abroad.

Once resident, worldwide income is taxable in Italy. Before that, only Italian-source income is. Because the test operates for the greater part of the year, the date on which you register is frequently the single most consequential decision in a relocation, and it is almost always made for practical reasons rather than tax ones.

Double Taxation and the Foreign Tax Credit

Where foreign income is included in Italian total income and has borne final tax abroad, a credit is available. It is limited to the proportion of Italian tax attributable to that income, and where the foreign income is only partly included in the Italian base, the foreign tax is reduced correspondingly. Italy has an extensive treaty network which allocates taxing rights and caps source-country withholding; treaties override domestic law where they conflict.

The limit that surprises people is the one described above: income subject to a final withholding or substitute tax in Italy is not in total income, so as a rule no credit arises. Italy tax for expats with substantial foreign investment income is often decided by this point rather than by the rates.

Assets Held Abroad

Residents pay two wealth taxes on assets outside Italy: one on foreign real estate and one on foreign financial assets, both charged annually on value. They must also report foreign investments and assets in the tax return for monitoring purposes, separately from any tax due, unless an exemption applies. The reporting obligation is independent of whether the asset produced any income.

Social Security Is Not Tax, and It Changes the Answer

There is no separate Italy salary tax: what leaves an Italian payslip is IRPEF withheld monthly by the employer, plus the two surtaxes, plus social security contributions. Salary tax in Italy is a collection mechanism rather than a distinct levy. But social security is a substantial cost, it is not income tax, it is generally not creditable against foreign income tax, and comparisons that ignore it will understate the total burden. Where a totalisation agreement applies, contributions may be due in only one country.

Filing and Paying

Two returns exist for individuals. The simplified form is available to employees and pensioners with an Italian withholding agent, and now also accommodates foreign asset reporting in many cases. Everyone else (the self-employed, holders of a VAT number, non-residents, and residents whose position does not fit the simplified form) uses the full return.

Payment runs on a different calendar from filing. The balance for the previous year and the first payment on account for the current one fall due on 30 June, or 30 July with a 0.4% surcharge. The second payment on account is due by 30 November, with no possibility of deferral. Advance payments are set at 100% of the prior year's tax, split 40/60 for most taxpayers and 50/50 for those subject to the sector reliability indices.

For 2026 the June deadline was extended to 20 July without surcharge, or 20 August with a 0.8% surcharge, for taxpayers subject to the reliability indices and for those on the flat-rate regime. Extensions of this kind are announced most years and are not something to plan around.

The Payment on Account, and the Year It Doubles

The Italian system asks you to pay next year's tax before you have earned the income. That is what the payments on account are, and the way they interact with a first year of Italian residence produces a cash-flow surprise that catches almost every new arrival.

In your first year as an Italian taxpayer, nothing is due on account: there is no prior year to compute it from. You file in the following June and pay the balance for that first year and, at the same moment, the first payment on account for the second year, calculated at 100% of the tax you have just been assessed. In practice the June payment in your second year is roughly double the tax on a single year of income, with the remainder following in November.

A person relocating on a substantial income routinely budgets for the first year and is then presented, eighteen months after arrival, with a demand of a different order. Nothing has gone wrong; the system has simply caught up.

Two ways of computing the amount exist. The historic method takes 100% of the previous year's tax and is the safe default. The forecast method lets you pay on the basis of what you expect to owe this year, which is the right choice where income has genuinely fallen; but if the forecast turns out to be too low, penalties apply on the shortfall. Guessing downwards to ease the cash flow is not a free option.

One calendar point that catches property owners: the surtaxes, the substitute taxes, the flat rental regime, the wealth taxes on foreign assets, the tax on crypto-assets and social security contributions for the self-employed all follow the income tax dates. Municipal property tax does not: it runs on 16 June and 16 December, on its own track.

Where a payment is late or a return understated, the ravvedimento operoso mechanism reduces penalties substantially if the correction is made before the authorities act. The reduction depends on how quickly you move.

Where the Decisions Actually Get Made

Almost everything expensive in this guide is settled before the first return is ever filed:

• whether you are resident for a given year, and from when;
• whether foreign investment income goes through an Italian intermediary or stays on a foreign platform;
• whether an optional regime is available and elected in time;
• which municipality you are registered in on 31 December;
• whether the children's position has been checked before, rather than after, it matters.

None of these is a filing question. They are structural decisions with a window that closes, usually on arrival.

Most of the costly errors we see are not errors of Italian law; they are the result of two systems being planned separately.

Avv. Marco Mesina, Founder of Move to Dolce Vita

Why Work with Us

We work from primary sources: the consolidated income tax act and the legislation amending it, the implementing decrees, the circulars of the Italian Revenue Agency, and the decisions themselves. Where the position is unsettled we say so and give both readings.

We advise on the structure of a move before it happens (residence timing, regime eligibility and election, how foreign income and assets should be held) and we handle the compliance that follows, including advance rulings where a position deserves confirmation in writing.

And we work across the borders rather than on one side of them. Most of the costly errors we see are not errors of Italian law; they are the result of two systems being planned separately.

Frequently Asked Questions

What is the income tax rate in Italy?

From 2026: 23% up to 28,000 euro, 33% from 28,000 to 50,000, and 43% above 50,000. For income earned in 2025 the middle band is 35%. Regional and municipal surtaxes of roughly 1.23% to 3.33% and up to 0.8% respectively are added on top.

What is the effective tax percentage in Italy on a normal salary?

On 60,000 euro of taxable income the national tax alone is 18,000 euro, or 30%. With surtaxes the total lands between about 31% and 34% depending on region and municipality, before any credits. The headline 43% applies only to the slice of income above 50,000 euro, never to the whole.

Is there a separate tax regime for foreigners?

No. The rates and the structure are identical. What differs is the base: residents are taxed on worldwide income, non-residents only on Italian-source income. Several optional regimes exist for people who become resident, but they are elections available on conditions, not a foreigner rate.

How does Italy decide whether I am tax resident?

For the greater part of the year, whether you had your habitual abode in Italy, your domicile in Italy, your physical presence in Italy counting part-days, or a registration in the resident population register. Any one is enough. Only the registration can be rebutted on evidence.

Is my foreign income taxed in Italy?

If you are resident, yes, wherever it arises. A credit is generally available for foreign tax on income included in your Italian total income, subject to limits. Income taxed in Italy by final withholding or substitute tax is not in total income, and as a rule no credit arises on it, which is the trap that costs the most.

Do the tax credits work the same at every income level?

No. Above 75,000 euro the expenditure eligible for credits is capped overall, by reference to income and dependent children. Above 120,000 euro a second mechanism scales the credits down, reaching zero at 240,000. From 2026 a third reduction of 440 euro applies above 200,000. The three are cumulative.

When are Italian taxes due?

The balance and first payment on account fall due 30 June, or 30 July with a 0.4% surcharge; the second payment on account by 30 November, which cannot be deferred. For 2026 the June date was pushed to 20 July for certain categories.

Why is my second Italian tax bill so much bigger than my first?

Because of the payments on account. In your first year nothing is due on account, since there is no prior year to compute it from. In June of the following year you pay the balance for year one and, simultaneously, the first payment on account for year two at 100% of that same tax. The June demand in your second year is therefore close to double a single year's tax, with the rest due in November.

Is social security included in these rates?

No. Contributions are separate from income tax, are a significant cost, and are generally not creditable abroad as income tax. Any comparison of Italy against another country that looks only at income tax rates is incomplete.

Is anything changing in 2027?

The 1986 consolidated act is replaced from 1 January 2027 by a new text of 377 articles. It reorders and renumbers rather than changing rates, but article references move substantially, and guidance citing the old numbering will be pointing at a text that no longer exists.

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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)
• English · Italian · Spanish

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