If you’re planning a move to Italy, especially as an expat, one thing you don’t want to overlook is IRPEF—Italy’s personal income tax (Imposta sul Reddito delle Persone Fisiche). It’s a key piece of the puzzle when it comes to living and working here, and trust us, understanding how it works will save you a lot of headaches.

This guide will walk you through the essentials—how Italy’s progressive tax system works, which income brackets apply, the deductions and allowances you could be eligible for, and the special tax breaks aimed at attracting international professionals like you.

Whether your income comes from a job, investments, rental properties, or even stock profits, we’ll break down what you need to know. We’ll also go over how your total annual tax bill gets calculated—and yes, we’ll cover the nitty-gritty like regional and municipal taxes too.

Taxes in Italy can get complicated fast, especially if you’re relocating for work, retiring abroad, or investing in property. That’s why we strongly recommend speaking with tax experts who specialize in expat cases. At Moving2Italy, we know how crucial smart tax planning is to make your transition smooth and stress-free.

In this guide, you’ll also find clear info about what makes you a tax resident, when and how to file, how special tax regimes work (like the ones for returning Italians or foreign professionals), and how to avoid double taxation if you’re earning in multiple countries.

Bottom line? You don’t have to figure this out alone—and you shouldn’t. We’re here to help you make sense of it all, so your move to Italy starts on the right foot.

Understanding the Italian Personal Income Tax System (IRPEF)

In Italy, personal income tax does a lot of the heavy lifting when it comes to funding public services. The system covers a broad spectrum and affects both residents and non-residents earning income from Italian sources—basically, if you’re living or working in Italy, you’re likely in the mix. So, if you’re thinking about moving here, it’s essential to understand how the tax system works. A little planning now can save you a lot of headaches later, and life’s definitely easier with an expert in your corner. Check out our guide to learn what makes an Italian Tax Advisor truly stand out.

What is IRPEF

IRPEF — Italy’s personal income tax, also known as Imposta sul Reddito delle Persone Fisiche — works on a progressive scale, meaning the more you earn, the more you’re taxed. If you’re officially living in Italy, it applies to your income worldwide. If you’re not a resident but earn money in Italy, you’ll still need to pay up on what you make here.

According to the Italian tax authority (Agenzia delle Entrate), IRPEF covers a wide range of income types: salaries, freelance and business income, investments, rental income, and even certain one-off earnings. Your tax bill is calculated based on your total annual income (excluding anything that’s tax-exempt), minus the deductible expenses allowed by law.

Wondering if you count as a tax resident in Italy? It’s simpler than you might think. According to Article 2 of the Italian tax code (TUIR), if you meet any of the following for more than 183 days in a year (184 in a leap year), then—congrats—you’re officially in:

• You’re listed in Italy’s official resident registry (APR, a.k.a. Anagrafe Popolazione Residente);
• Your main home or domicile is in Italy;
• Italy is where you spend most of your time.

Structure of the Tax System in Italy

Italy’s tax system isn’t just one-size-fits-all—it’s layered, and a bit of a maze. IRPEF (the national income tax) is just the beginning. On top of that, there are regional and municipal surcharges that can vary depending on where you live.

Here’s how it breaks down:

• IRPEF is your main national income tax, calculated progressively based on how much you earn.
• Then come regional surcharges (addizionale regionale), which can range from 1.23% to 3.33% of your taxable income depending on the region.
• And finally, there’s the municipal surcharge (addizionale comunale), which usually adds up to 0.8% more.

But wait—there’s more! If you’re employed in Italy, you’ll also be contributing to the INPS, Italy’s national social security system.

• Employees typically pay around 9–10% of their gross salary;
• Employers pitch in about 30%.

These contributions help fund pensions, healthcare, and other benefits under Italy’s welfare system.

Now, we get it—navigating all of this can feel overwhelming (especially if you’re new to the country). That’s why we always recommend getting expert advice. At Moving2Italy, we’re here to help you make sense of it all—from staying compliant to optimizing your taxes—so you can focus on settling into life in Italy with peace of mind.

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Progressive Income Tax Brackets (Scaglioni Fiscali)

In Italy, the more you earn, the more you’re taxed—it’s that simple. That’s because the country uses a progressive tax system, where your tax rate increases as your income goes up. So, knowing which tax bracket you fall into isn’t just helpful—it’s key to managing your money wisely and avoiding any unpleasant surprises.

Income Tax Brackets and Rates in 2025

Italy breaks down personal income tax into different brackets, each with its own rate. It’s a tiered system, and understanding where you land helps you see how much of your income goes to taxes.

Check out the chart below for a breakdown of Italy’s income tax rates for 2025:

Income Bracket (EUR)	Tax Rate	Description
Up to 28,000	23%	Applied to income from 0 to 28,000 EUR
28,001 – 50,000	35%	Applied to income in this bracket
Over 50,000	43%	Applied to all income exceeding 50,000 EUR

How Tax is Calculated Based on Brackets

Italy’s tax system works on a progressive scale, which basically means you don’t pay the same tax rate on every euro you earn. Instead, your income is split into brackets (called scaglioni), and each bracket gets taxed at a different rate.

Let’s break it down with an example:

📝  Say you earn €35,000 in taxable income.

• You’ll pay 23% on the first €28,000, which comes out to €6,440.
• The next €7,000 (from €28,001 to €35,000) is taxed at 35%, so that’s another €2,450.

      → So in total, your tax bill would be: €6,440 + €2,450 = €8,890.

This is how marginal taxation works—only the income that falls into a specific bracket gets taxed at that rate, not your whole salary. It’s a smart system, but also one that can get a bit tricky depending on your situation.

That’s why it’s a good idea to talk to a tax pro who knows the Italian system inside and out. They can help you plan better, stay compliant, and maybe even save you some money along the way.

Make the smart move—enjoy the perks, avoid the headache

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Determining Your Taxable Income (Reddito Imponibile)

Figuring out what counts as taxable income in Italy isn’t always straightforward. That’s because Italian tax law recognizes a wide range of income sources, and each type is taxed a little differently. From employment and freelance gigs to rental income and capital gains, every category has its own rules and quirks.

With all these variables, it’s easy to get overwhelmed. The Italian tax system isn’t exactly known for being simple—so if you want to make sure you’re reporting everything correctly and staying on the right side of the law, teaming up with a tax expert can make all the difference.

They’ll help you navigate the rules, avoid mistakes, and feel a whole lot more confident when it’s time to file.

Summary of Taxable Income Sources

When it comes to paying taxes in Italy, not all income is treated the same. The Italian tax system (again, IRPEF) breaks things down into different categories—so here’s what could land on your tax radar:

• Employment income (your regular 9-to-5 job, a.k.a. Reddito da lavoro dipendente)
• Self-employment or freelance income (a.k.a. Reddito da lavoro autonomo)
• Business income (if you’re running your own company, a.k.a. Reddito d’impresa)
• Property income (from land or buildings you own, a.k.a. Reddito fondiario)
• Investment or capital income (Reddito di capitale)
• Pensions (Reddito da pensione)
• Miscellaneous income (a.k.a. Redditi diversi– everything else that doesn’t fit in the previous categories)

If you’re living in Italy, keep in mind that your global income can also be taxable. That means if you own property abroad, you might be subject to IVIE, a tax on foreign real estate (Imposta sul Valore degli Immobili situati all’Estero). And if you’ve got foreign investments, IVAFE (Imposta sul Valore delle Attività Finanziarie Detenute all’Estero), a tax on financial assets you hold outside of Italy, might apply.

Both of these are considered wealth taxes, and whether or not you have to pay them depends on your residency status and a few other key details. When in doubt, it’s always a good idea to run things by a tax pro who knows their way around Italian (and international) tax rules.

Taxable Income from Employment

When we talk about employment income in Italy, it’s basically any pay you get from your job — but it’s not just your regular salary. It also includes things like:

• Your usual wages or salary;
• Perks like a company car, housing allowance, or meal vouchers (these are usually taxed based on their market value);
• Bonuses and commissions (which get taxed as soon as you receive them);
• Overtime pay (which is taxed right when it lands in your paycheck);
• Stock options or equity compensation (which come with their own special tax rules depending on how and when you get them).

Italian employers handle tax withholding automatically, taking care of taxes right out of your paycheck. But if you’re a foreign national juggling income from Italy and other countries, things can get a bit tricky. That’s when having a tax pro in your corner really pays off — to make sure you’re clear on what to report and how to handle all your income streams properly.

🔎 Want to know more about employment in Italy? Check our detailed guide!

Taxable Income from Self-employment (Including Regime Forfettario)

If you’re working as a freelancer, independent contractor, or running your own business in Italy, your self-employment income falls under specific tax rules. There are a couple of ways Italy handles tax on this kind of income:

First up is the standard regime, where you pay tax on your net income after deducting allowable business expenses — pretty straightforward, but it can get detailed.

Then there’s the flat-rate regime (known as Regime Forfettario), which is a simpler, more budget-friendly option if your earnings stay below €85,000. With this setup, you get a flat tax rate — usually 15%, but if you’re just starting out, the rate can be as low as 5% for the first five years. It comes with some nice tax breaks and fewer headaches.

If you want to know exactly how this flat-rate option works and whether it fits your situation, we’ve got a complete Guide to the Flat-rate Tax System that breaks it all down with real-world examples.

Self-employment taxes can get tricky, especially if you mix different income types or special tax rules. That’s why chatting with a tax expert can save you money and stress — helping you navigate Italy’s tax system smoothly while staying fully compliant.

Forget the paperwork, and let us handle everything.

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Regional and Municipal Income Taxes (Addizionali IRPEF)

Besides the national IRPEF income tax, if you’re an Italian tax resident, you’ll also need to cover some local taxes—specifically regional and municipal add-ons known as Addizionali. Think of these as extra layers on top of your main tax bill.

The tricky part? These local taxes vary quite a bit depending on where you live in Italy. Different regions and municipalities set their own rates, which can make a noticeable difference in your overall tax load and might even influence your choice of where to settle down.

Understanding Regional Income Tax (Addizionale Regionale)

Each of Italy’s 20 regions charges a regional income tax on your taxable income. The rates aren’t the same everywhere—they can range anywhere from about 1.23% to a max of 3.33%, and some regions use a progressive scale based on your income, while others stick to flat rates.

Here are some examples from key regions:

• Lombardy: Around 1.73% (progressive from 1.23% up to 1.73%);
• Lazio: Between 1.73% and 3.33%, progressive;
• Veneto: Flat 1.23%;
• Piedmont: 1.62% to 3.33%, progressive;
• Campania: 2.03% to 3.33%, progressive.

What’s important to know is that this regional tax applies to the same taxable income amount as your national IRPEF, so it can add up fast.

That’s why it pays to look at the whole picture—how you run your business, where you choose to establish your tax residency, and even your family situation—before picking your spot to settle down in Italy.

Understanding Municipal Income Tax (Addizionale Comunale)

On top of the national IRPEF tax, there’s also a local “add-on” — the municipal surcharge. Every one of Italy’s roughly 8,000 municipalities (called “comuni”) sets its own rate, capped at 0.8%, which applies to the same taxable income used for IRPEF.

Here’s a quick peek at some municipal rates in major cities:

• Rome: 0.9% (max. allowed rate)
• Milan: 0.8%
• Naples: 0.8%
• Turin: 0.8%
• Florence: 0.3%
• Bologna: 0.8%
• Venice: 0.8%

While the municipal surcharge might seem small compared to regional taxes, it’s still another layer added to your tax bill. Big cities tend to hit the max rate, while smaller towns sometimes charge less. When you combine regional and municipal taxes, the total can add up more than you’d expect, bumping up what you owe.

Because these rates vary so much, it’s super important to get expert advice. Working with pros ensures your tax planning is spot-on, and you can make smart choices about where to live and register your tax residency. At Moving2Italy, we’re here to help you navigate these regional and local taxes and find ways to optimize your tax situation based on your personal circumstances.

Ready to get started? Book your consultation and we’ll match you with the expert best suited to your needs.

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Withholding Tax (Ritenuta d’Acconto)

In Italy, withholding tax (called Ritenuta d’acconto) is the main way taxes get collected upfront. Basically, it means that certain payers hold back a portion of your income and send it straight to the tax office for you.

This system is super helpful because it keeps tax payments on track throughout the year, reduces the chance of big tax bills piling up later, and makes it easier to stay on the right side of your tax responsibilities.

How Withholding Tax Works for Employees

For employees, withholding tax happens automatically on the paycheck. 

Italian employers are responsible for:

• Calculating and deducting the IRPEF tax based on your salary and the relevant tax brackets;
• Taking out any regional and municipal taxes, depending on where you live;
• Deducting social security contributions (INPS);
• Providing you with an annual summary of all these deductions (called Certificazione Unica or CU).

Thanks to this system, most employees have already covered most of their tax bill through payroll deductions. Any final adjustments happen later when you file your annual tax return (Dichiarazione dei redditi).

When an employer agrees to be the withholding agent (Sostituto d’imposta), they take on the job of making sure the right amounts are withheld and paid to the tax authorities on time.

Withholding Tax for Other Income Types

Withholding Tax doesn’t just apply to employees—it covers a bunch of other income types too. For example:

• Self-employed professionals who aren’t under the flat-rate (Regime Forfettario) system have 20% withheld from their fees;
• If you do occasional freelance work (Prestazioni occasionali), you’ll usually see a 20% tax withheld on payments over a certain amount;
• Rental income paid to non-residents renting out property in Italy might also have withholding tax taken at the source;
• Interest and dividends from Italian sources typically get hit with withholding taxes between 12.5% and 26%.

For self-employed individuals, this Withholding Tax acts as a prepayment on their yearly tax bill. When it’s time to file your tax return, you’ll reconcile what’s been withheld against what you actually owe—sometimes paying a bit more, sometimes getting some money back.

Because withholding tax rules can get tricky, especially when juggling different income sources or international situations, having a pro in your corner makes a huge difference. They can help keep you on the right side of the law and even find ways to improve your overall tax picture.

Focus on living the Italian dream—let us handle the tax rules. Book your consultation with our experts and navigate the tax system stress-free!

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Reducing Your Taxable Income: Tax Deductions (Detrazioni Fiscali)

Making the most of your tax deductions (Detrazioni Fiscali) is a smart way to lower your taxable income—and Italian tax law definitely lets you do that. The key is knowing how to claim these deductions properly so you get the best possible tax break.

Common Tax Deductions

Italy offers a bunch of handy tax deductions for residents that can really help lower your tax bill:

• Healthcare costs: You can get 19% back on eligible medical expenses over €129.11 — think specialist visits, treatments, surgeries, and prescriptions.
• Education expenses: Whether it’s school fees, university tuition, or specialized training, there are deductions available—though limits vary depending on the level.
• Mortgage interest: You can deduct interest paid on loans for your primary home, as long as you meet certain conditions.
• Insurance premiums: Life, disability, and some health insurance premiums can qualify for deductions too.
• Energy efficiency upgrades: Planning to make your home greener? Installing solar panels or improving insulation? There are tax breaks for those kinds of renovations.

Because the rules and paperwork can get pretty detailed, it’s a good idea to team up with a tax pro who can help you claim every deduction you’re entitled to, all while staying on the right side of Italian tax law.

Reducing Your Tax Liability: Tax Credits

While tax deductions lower your taxable income, tax credits actually cut down the amount of tax you owe—euro for euro. Knowing which tax credits you qualify for and how to use them can make a big difference in your final tax bill.

Unlocking Tax Credits: Where to Look and How to Claim Them

When it comes to tax credits in Italy, there are some popular ones you definitely want to know about:

• Employment Income Tax Credit: This one’s designed to help out lower and middle-income earners more, with the amount automatically adjusted based on what you make. Higher earners might see a smaller credit, but it’s a nice boost for most workers.
• Dependent Children Tax Credit: Got kids? You could get a credit that depends on how many children you have, their ages, and if any of them have disabilities. The more dependents, the better the credit.
• Renovation Tax Credits: If you’re sprucing up your place, especially with energy-saving upgrades or earthquake-proofing, there are some seriously generous credits here—sometimes even more than what you spend! And the best part? You can spread those credits out over up to 10 years.
• Family Support Tax Credits: Supporting family members who don’t have their own income? Whether it’s a spouse or elderly relatives, you might qualify for tax credits for that support.

Tax credits are like golden tickets to lowering your tax bill, but they come with specific rules and paperwork. That’s why having a pro on your side — like the experts at Moving2Italy — can make all the difference. They’ll help you find every credit you qualify for and guide you through the claiming process, so you get the most out of the system while staying fully compliant.

📌 Remember, unlike deductions that just shrink your taxable income, tax credits actually knock money off what you owe. Knowing how to use them right can seriously impact your final tax bill.

Special Tax Regimes for New Residents and Expats

Italy offers some pretty attractive tax schemes designed to welcome newcomers and international professionals. If you qualify, these special regimes can seriously slash your tax bills.

Tax Benefits for New Residents

If you’re new to Italy, the “Regime dei neo-residenti” comes with some pretty sweet perks:

High-net-worth individuals, in fact, can choose to pay a flat annual tax of €200,000 on their foreign income—no matter how much they actually earn—while still being taxed normally on income made in Italy. This special deal lasts up to 15 years, and you can even extend it to family members for an extra €25,000 each.

Want to know if you qualify and how to apply? Check out our full guide to the New Residents Tax Regime.

Tax Benefits for Foreign Workers / Expats

Italy rolls out the red carpet for qualified foreign workers with some seriously attractive perks:

Under the Impatriate Regime (Regime degli impatriati), if you’re moving to Italy for work, you can get a 50% to 60% tax break on your employment or self-employment income for five years—up to an income cap of €600,000. The catch? You shouldn’t have lived in Italy for the three years before your move.

And if you’re a researcher or academic, even better—you could score a whopping 90% tax exemption on your income for up to thirteen years (conditions apply).

These special regimes come with their fair share of fine print, so smart planning and knowing the ins and outs of eligibility are a must. Teaming up with a savvy tax advisor is the best way to figure out which deal suits you and to make sure you stay on the right side of the rules while enjoying the benefits.

🔎 Wanna know more about the eligibility requirements for each tax benefit? Check our guide!

Confused about the Italian Tax System? Let us simplify your life by finding the perfect tax fit for you!

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Taxation of Specific Income Types

In Italy, not all income is treated the same—and knowing the difference can make a big impact on your tax bill. Whether it’s salary, rental income, dividends, or freelance earnings, each type comes with its own rules and rates. Getting a grip on how each category is taxed is key if you want to plan smart and keep more of your money in your pocket.

Capital Gains

In Italy, most capital gains—like profits from selling stocks, crypto, or certain real estate—are hit with a flat 26% tax. That includes earnings from financial assets like bonds, shares, derivatives, foreign currency trades, and even non-qualified business shares. If you sell a property that’s not your main home, you might also owe capital gains tax on the profit.

But here’s the twist: not all gains are treated equally. Some situations come with lower rates or even exemptions. So before you make a move, it’s smart to get proper tax advice. A good advisor can help you plan your investments in a way that keeps more of your gains in your pocket.

Rental Income

If you’re earning income from renting out property in Italy, you’ve got two main ways to handle the taxes:

1. Standard IRPEF – This follows the regular progressive tax brackets and applies to your net rental income (that’s your rental income minus eligible expenses like maintenance or agent fees).
2. Cedolare Secca – A simplified flat-tax regime:
   • 21% for standard rental contracts;
   • 10% for agreed-rent (Canone concordato) contracts;
   • No regional or municipal surcharges added.

Which one makes more sense? That depends on things like your total income, property type, and lease agreement. A qualified tax pro can help you crunch the numbers and pick the option that gives you the best deal.

Calculations are complex. Let a pro take over, so you can focus on what matters.

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Duties of Italian Taxpayers

Staying on top of your tax obligations is a must for anyone living in Italy. Smart tax planning and staying compliant not only keep you out of trouble, but can also help you save money in the long run. That means knowing what to file, when to file it, what you can deduct, and which deadlines to keep an eye on. In many cases, working with a trusted tax advisor can make a big difference—helping you meet all your obligations, make the most of the options available, and minimize your tax bill wherever possible.

Filing Income Tax Returns

If you’re a tax resident in Italy, filing your annual income tax return isn’t optional—it’s part of the deal. Most people use one of two main forms, depending on their situation:

• Modello 730: Perfect for employees and pensioners. It’s straightforward, allows for automatic tax adjustments through your employer, and must be submitted by September 30.
• Modello Redditi PF (formerly Modello Unico): This one’s for the self-employed, freelancers, and business owners. It’s a bit more complex and must be filed online by November 30.

As a resident, you’re required to report your worldwide income—not just what you earn in Italy. That includes foreign assets, overseas investments, and any deductions or tax credits you’re claiming. And yes, skipping out or making mistakes can lead to hefty penalties and interest ⚠️

If you’re planning on becoming an Italian tax resident—or already are—getting expert advice isn’t just helpful, it’s smart. The rules can be tricky, and each financial move you make could affect your tax position. That’s where Moving2Italy steps in. We help make sense of the forms, deadlines, and choices so you can meet all your obligations, stay compliant, and legally lower your tax bill wherever possible.

A European Tax Rate Comparison: Where Does Italy Stand?

When you’re considering a move to Italy, it’s smart to look beyond the pasta and piazzas—and take a good look at the tax rates too. Comparing Italy’s tax system to those of other European countries can give you valuable context and help you make more informed choices when it comes to budgeting, investing, and overall financial planning. It’s not just about where you want to live—it’s also about how your money will work for you once you’re there.

A Brief Overview of Income Tax Rates in Selected European Countries

With a top income tax rate of 43%, Italy sits in the middle-to-high range when compared to other European countries.

• Take Germany, for example—its top rate is 45%, but it only kicks in on income over €277,826, and like Italy, it uses a progressive tax structure. 
• France also caps out at 45%, starting at a lower threshold of €177,106. 
• Spain’s rates vary by region and range between 19% and 47%,
• while the UK applies bands from 20% to 45%, plus an additional charge for income above £125,140.

Of course, just looking at top rates doesn’t tell the whole story. Tax systems are more than just percentages—they also include local taxes, social security contributions, deductions, credits, and special tax regimes that can dramatically change what you actually pay.

Add in the effects of tax treaties, residency rules, and the complexity of cross-border income, and it becomes clear that navigating international taxes is no simple task.

That’s where an expert Italian tax advice makes a difference. At Moving2Italy, we specialize in international taxation and can help you make sense of your personal tax position—whether you’re comparing countries, planning your move, or just trying to stay compliant while optimizing your tax strategy.

Focus on living the Italian dream—let us handle the tax rules. Book your consultation with our experts and navigate the Italian Tax System stress-free!

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