Income tax in Italy: how IRPEF works in 2026

If you live in Italy or earn money here, the tax that matters most is the personal income tax (IRPEF, short for Imposta sul Reddito delle Persone Fisiche). It is progressive and applies across the whole country, so each additional euro you earn can be taxed at a higher rate than the euro before it. Two local surtaxes are added on top, and many of the self-employed can opt for a flat tax instead. Here is how the pieces fit together in the 2026 tax year, using the figures set by the 2026 Budget Law.

The 2026 IRPEF brackets and rates

Italy taxes your income in slices, the scaglioni. Each slice has its own rate, so a higher bracket only ever applies to the part of your income that falls inside it, never to the whole amount. The main change for 2026 is that the 2026 Budget Law cut the middle rate from 35% to 33%. For middle earners that is worth up to about €440 a year.

Taxable income	2026 IRPEF rate
Up to €28,000	23%
€28,001 – €50,000	33%
Over €50,000	43%

Take a taxable income of €40,000. You pay 23% on the first €28,000, then 33% on the remaining €12,000 only. The 33% never touches the lower slice. To see how this works out for your own salary, try the Italian tax calculator.

The no-tax area: who pays nothing

Italy has no formal zero-rate bracket, yet plenty of low earners owe no IRPEF at all. In 2026, employees and pensioners earning up to €8,500 a year sit inside the so-called no-tax area. It is an arithmetic result, not a written exemption: the employment tax credit described below is large enough to wipe out the 23% IRPEF due on income up to that level.

Tax credits that reduce what you owe

The rates above are only the starting point. Employees get an employment income tax credit (detrazione per lavoro dipendente) that comes off the IRPEF you owe, not off your income. In 2026 it is worth up to €1,955 a year for income up to €15,000, then it tapers down and reaches zero above €50,000. Your employer applies it through the payslip, so there is nothing to claim yourself.

Lower-paid employees may also get the supplementary treatment (trattamento integrativo), still widely called the "Renzi bonus": up to €1,200 a year for income up to €15,000, paid as extra net pay once your gross IRPEF is more than the credits due. On top of that, the usual detrazioni at 19% cover costs such as medical bills, mortgage interest on a main home, and school fees.

Regional and municipal surtaxes (addizionali)

IRPEF is the national layer. Your region and your town each add a surtax of their own, the addizionali, worked out on the same taxable income:

• Regional surtax (addizionale regionale): roughly 1.23% to 3.33%, depending on where you live.
• Municipal surtax (addizionale comunale): from 0% up to about 0.9%, set by each comune.

For employees these are usually withheld across the following year, which is why your net pay can move between January and the months when the addizionali are collected. Two people on the same gross salary can take home different amounts purely because they live in different towns.

Employees vs. self-employed: two very different paths

The way you earn decides the way you are taxed. For employees, the employer withholds IRPEF, surtaxes and social security contributions (INPS) at source, so the money that reaches their account is already net. Most never deal with the tax office directly.

The self-employed (partite IVA) are taxed on their profit and pay in installments through the annual return. Many of them qualify for something far simpler: the flat-rate scheme (regime forfettario).

The flat-rate scheme (regime forfettario)

If your revenue stays under €85,000 a year and you meet the conditions, you can leave the progressive IRPEF brackets behind and pay a single substitute tax (imposta sostitutiva) instead:

• 5% for the first five years of a genuinely new business, if the entry conditions are met;
• 15% in the standard case.

This flat tax stands in for IRPEF, the regional and municipal surtaxes, and IRAP, all at once. The trade-off is that you cannot deduct your real costs. Your taxable income is instead a fixed share of your revenue, set by a profitability coefficient between 40% and 86% that depends on your business activity code (codice ATECO), and the flat rate applies to that figure. INPS contributions are still due on top, whatever regime you are in.

If you earn more, or your real costs are high, the ordinary regime with progressive IRPEF and full expense deductions can come out cheaper. It is worth running the numbers both ways before you decide.

What else lands on top

IRPEF is only one part of the Italian tax picture. Own a second home or certain other properties and you will also run into the local property tax; our guide to property tax in Italy explains how that is worked out. And before you sign an employment contract, it pays to model the whole gross-to-net path, surtaxes and credits included, in the Italian tax calculator.

The bottom line

In 2026, Italy taxes personal income at 23%, 33% and 43% across three brackets, eased by an employment tax credit and a no-tax area up to €8,500, with regional and municipal surtaxes added on top. Employees have all of this handled at source. The self-employed often pay less under the flat-rate scheme's 5% or 15% substitute tax, as long as they stay under €85,000 and do not have heavy deductible costs.