Italy's New 33% Tax Bracket 2026: What Changed and How Much You Save

Italy's 2026 budget (Law 199/2025) made the three-bracket IRPEF system permanent and reduced the middle rate from 35% to 33%. This affects everyone earning between €28,000 and €50,000 in taxable income. Here's what it means for your paycheck.

Old vs new IRPEF brackets

The middle bracket dropped by 2 percentage points. This saves up to €440/year for anyone earning above €50,000 in taxable income (€22,000 band × 2% = €440).

Real savings at every salary level

The maximum savings are €440/year (€37/month). Not life-changing, but welcome. It's capped because the reduced rate only applies to the €28,000-€50,000 band.

Italy's overall tax burden

Even with the reduction, Italy remains one of Europe's higher-tax countries for employees. On a €50,000 gross salary:

• INPS (social security): 9.19% = €4,595
• IRPEF (income tax): ~€11,430 (after employment credit)
• Regional/municipal tax: ~2% = ~€900
• Total deductions: ~€16,925 (33.9%)
• Net salary: ~€33,075

Compare this to Germany (€33,100 net) or Portugal (€34,700 net) on the same gross — Italy is in the same ballpark, slightly below.

Special regimes for new residents

Italy also offers several tax incentives for people moving to Italy:

• Impatriate regime: 50% tax exemption on employment income for workers transferring to Italy (70% in southern regions). Requires not being tax resident in Italy for 2+ years before.
• Flat tax for high earners: €100,000 annual substitute tax on all worldwide income — attractive for wealthy individuals with significant foreign income.
• Pensioner flat tax: 7% flat rate for foreign pensioners who move to southern Italian municipalities.