Italian Tax for Expats: The Impatriate Regime After the 2024 Cut, IRPEF & INPS (2026)

Italy’s inbound tax regime used to be the most generous in Europe, and in 2024 it was cut roughly in half — which almost every article on the internet has failed to notice. The old regime impatriati exempted 70% of your income (90% if you moved South) for five years, extendable to ten. The version that applies to those arriving from 2024 exempts 50%, caps the benefit at €600,000 of income, and adds a qualification requirement. It is still valuable — halving the tax on an Italian salary is not nothing — but it is a different proposition, and anyone modelling a move on the old numbers is modelling a country that no longer accepts new entrants on those terms. This guide sets out the 2026 position: IRPEF and surcharges, the new impatriate regime in detail, the flat-tax regimes, INPS, equity, and what employment costs an Italian employer.

How does ordinary Italian income tax work?

IRPEF was simplified in 2024 into three bands: 23% up to €28,000, 35% from €28,000 to €50,000, and 43% above €50,000. On top sit the addizionale regionale (set by each region, roughly 1.2–3.3%) and the addizionale comunale (set by each municipality, up to around 0.9%) — so a professional in Rome or Milan faces an effective top marginal rate around 47–48%.

The 43% band starting at just €50,000 is the important detail: Italy’s top rate bites at a level that would be firmly middle-class in Germany, the Netherlands or the UK. An Italian professional earning €70,000 — a good salary by local standards — is already deep in the top bracket. This is the arithmetic behind Italy’s persistent brain drain, and it is why the impatriate regime exists at all.

Deductions and credits (detrazioni) for employment income, dependants, medical expenses, mortgage interest and renovation works (the famous building bonuses, now scaled back) reduce the effective burden meaningfully at lower incomes and less so at higher ones. Most employees have tax withheld by the employer as sostituto d’imposta and never file a return, using the modello 730 if they wish to claim additional deductions.

What exactly is the new regime impatriati?

For workers transferring tax residence to Italy from 2024 onward, the regime provides: an exemption of 50% of Italian-source employment, similar-to-employment or self-employment income, capped at €600,000 of income per year, for the year of transfer and the four following years (five in total).

The conditions are stricter than before: you must not have been tax resident in Italy in the three preceding tax years (extended to six or seven years where you are moving within the same group of companies for which you previously worked abroad); you must commit to remaining tax resident in Italy for at least four years (or repay the benefit with interest); the work must be performed predominantly in Italy; and you must meet a high-qualification or specialisation requirement (broadly, a degree-level qualification in a relevant field, or recognised specialised expertise).

An enhanced 60% exemption is available where the worker relocates with a minor child, or has a child born or adopted during the period — a family-linked uplift that replaced the old regional and dependant-based extensions. What is gone: the 70%/90% exemptions, the automatic five-year extension to ten years (for property purchase or children), and the extraordinarily favourable Southern regime. Anyone who took the old regime keeps it for their remaining period; new arrivals do not.

What are the flat-tax regimes for wealthy and retired arrivals?

The HNWI regime (neo-domiciliati): individuals transferring tax residence to Italy who were non-resident for at least nine of the preceding ten years may elect a flat substitute tax on all foreign-source income, regardless of amount, for up to 15 years. The charge was raised to €200,000 for those transferring residence from August 2024 (previously €100,000), with a €25,000 charge per additional family member. Italian-source income is taxed normally. For someone with substantial foreign investment income, this remains one of the most attractive regimes in Europe — a competitor to the UK’s replaced non-dom rules and Switzerland’s lump-sum taxation.

The 7% flat-tax regime for pensioners: foreign pensioners who transfer residence to a municipality with fewer than 20,000 inhabitants in the South (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Puglia) may elect a 7% flat tax on all foreign-source income — including pensions, dividends and capital gains — for ten years. It is a genuinely remarkable offer, and it is the reason parts of southern Italy have become a retirement destination.

The regime forfettario for the self-employed offers a 5% (first five years) or 15% flat tax on a deemed profit percentage, for those below a revenue threshold (€85,000) — among the best small-business tax regimes in Europe, and highly relevant to freelancers and consultants, including many on the digital nomad route from our Italy visa guide.

How does INPS work?

Social security contributions are among Europe’s heaviest: roughly 9.19% from the employee and around 30% from the employer (varying by sector, company size and contract type), covering pension (the dominant element), unemployment (NASpI), sickness, maternity, and family allowances. There is a contribution ceiling for certain categories of worker who entered the system after 1996.

What it buys: the SSN (national health service — universal, largely free at point of use, and generally good, though with significant regional variation between the North and South and long waits for specialist care), a contributory pension under the notional-defined-contribution system, unemployment benefit (NASpI, paid for a period linked to contribution history), and generous maternity provisions.

International coordination: EU rules and Italy’s bilateral agreements allow A1 certificates for posted workers and totalisation of contribution periods for pension purposes. And a point worth noting for anyone who will not stay: Italian pension contributions are not refundable on departure — they remain in the system and can be claimed at retirement or totalised. Do not leave Italy assuming the money is gone; it is not, and the paperwork to claim it later is worth doing while you still have the documents.

What about equity, investments, and the exit position?

Capital gains on financial assets are generally taxed at a flat 26% (12.5% on Italian government bonds and equivalents), and dividends likewise at 26%. This is competitive by European standards and is a substitute tax, not aggregated into IRPEF. Crypto gains are taxed at 26% above an annual threshold (with the rate having been the subject of proposed increases — verify the current position).

RSUs and stock options are taxed as employment income at vesting or exercise, and — importantly — they fall within the impatriate regime’s 50% exemption where they relate to work performed in Italy during the regime period. For an executive with substantial equity, this can be the single largest benefit of the regime, and it requires careful attribution of the vesting period to Italian and non-Italian workdays.

Reporting: Italian residents must declare foreign assets on the quadro RW of their return, and pay IVAFE (a small wealth tax on foreign financial assets, 0.2%) and IVIE (on foreign real estate, 0.76% — raised to 1.06% from 2024). Note that HNWI flat-tax electors are exempt from RW reporting and from IVIE/IVAFE on foreign assets, which is a substantial additional benefit of that regime and rarely mentioned.

What does an employee cost an Italian employer?

Above gross salary: roughly 30% INPS (varying by sector and contract), INAIL (accident insurance, sector-rated), and the TFR (trattamento di fine rapporto) — a deferred severance accrual of roughly one month’s pay per year of service (technically annual salary divided by 13.5), revalued annually and paid on termination for any reason, including resignation. The TFR is the Italian equivalent of the Gulf’s end-of-service benefit, and it is a real and accruing liability.

Add the 13th month (tredicesima, paid at Christmas — and in many CCNLs a 14th paid in June), which means an annual gross quoted in thirteen or fourteen instalments, exactly as in Spain and Portugal. Realistic loading: 32–40% above the twelve-month salary figure, once TFR and the additional months are counted.

The offsetting attraction: Italian professional salaries are low — substantially below France, Germany and the Netherlands — and the talent, particularly in engineering, manufacturing, design and pharma, is excellent. Add the impatriate regime as a recruiting tool (an employer who can tell an international hire that half their income is tax-exempt for five years has a powerful pitch), and Italy becomes a genuinely competitive place to build a technical team, as our Italy employer compliance guide argues.

Frequently Asked Questions