Italy’s rich culture, cuisine, and relaxed Mediterranean lifestyle attract thousands of expats each year. But while living in Italy offers many pleasures, understanding how the Italian tax system works is essential before you settle down.

This guide explains everything expats need to know about taxes in Italy for 2026, including how residency affects your obligations, income tax rates, available deductions, and how to file your return.

The Basics of the Italian Tax System

Italy operates a progressive tax system that applies to both residents and non-residents, but the rules differ depending on your status. Taxes are collected at three levels:

• State (national government)

• Regional (based on where you live)

• Municipal (local community taxes)

The tax year runs from January 1 to December 31, and the tax filing deadline is typically between May and September 2027, depending on whether you file online or through a professional accountant.

The tax authority responsible for collection is the Agenzia delle Entrate (Italian Revenue Agency).

Who Has to Pay Taxes in Italy

Your tax obligations depend on whether you are an Italian resident or non-resident.

You are considered a tax resident in Italy if you:

• Spend more than 183 days in Italy during the tax year, or

• Have your registered residence in Italy, or

• Have your main economic or personal interests based in Italy.

Residents pay tax on their worldwide income (from both Italy and abroad).
Non-residents pay tax only on income earned in Italy, such as employment, property rental, or business profits.

Example:
If you move to Milan in March 2025 and live there continuously through 2026, you’ll be considered a tax resident and taxed on income from both Italy and abroad. If you work remotely from the UK but have a rental property in Rome, you’ll pay tax only on the Italian rental income.

Income Tax Rates in Italy for 2026

Italy applies progressive national tax rates (known as IRPEF – Imposta sul Reddito delle Persone Fisiche).

On top of these national rates, there are:

• Regional taxes ranging from 1.23% to 3.33% (depending on your region).

• Municipal taxes ranging from 0% to 0.9% (depending on your local authority).

This means that total effective tax rates in Italy generally range between 25% and 46%, depending on income and location.

Social Security Contributions

Employees and employers in Italy are required to make social security contributions to fund pensions, healthcare, and unemployment benefits.

• Employees contribute around 10% of their gross salary.

• Employers contribute about 30% to 35%.

• Self-employed workers contribute approximately 24% to 33%, depending on their profession.

Contributions are automatically withheld from salaries by employers or paid quarterly by self-employed individuals.

Deductions and Tax Credits

Italy provides a variety of deductions and tax credits (known as detrazioni e deduzioni) to lower your taxable income.

Common deductions include:

• Healthcare expenses exceeding €129.11 per year.

• Education expenses, including tuition fees.

• Mortgage interest payments on your main home (up to €4,000).

• Charitable donations to approved organizations.

• Life insurance and pension fund contributions (up to €5,164.57).

• Dependents such as children, spouses, or elderly relatives.

• Energy-efficient home renovations (known as the “eco-bonus”).

Example:
If you earn €45,000 a year and spend €2,000 on medical care and €1,500 on pension contributions, you can deduct those expenses, reducing your taxable income and final tax bill.

Special Tax Regimes for Expats

Italy offers several tax incentives for foreign residents to encourage relocation and investment:

• New Residents Regime (Flat Tax Regime): Qualifying individuals who move to Italy can opt to pay a flat annual tax of €100,000 on foreign income, regardless of the amount earned abroad.

• Impatriate Regime: Workers relocating to Italy for employment or self-employment can benefit from a 50% to 70% exemption on their employment income for five years (extendable in certain cases).

To qualify, you must become an Italian tax resident and not have been a tax resident in Italy during the previous two years.

These programs are especially attractive to high-net-worth individuals and professionals moving to Italy for work.

Double Taxation Treaties

Italy has signed double taxation agreements with over 100 countries, including the United States, the United Kingdom, Canada, Australia, and most EU nations.

These treaties prevent you from paying tax twice on the same income and clarify which country has the right to tax your earnings.

If you’ve paid income tax abroad, you can usually claim a foreign tax credit in Italy to offset that amount. Check the treaty between Italy and your home country for specific provisions.

How to File Taxes in Italy

Filing taxes in Italy can be done online or through an accountant.

Step 1: Gather your documents
You’ll need your Codice Fiscale (Italian tax ID), proof of income (such as a CUD form from your employer), bank statements, and receipts for deductions.

Step 2: File your return
You can file your tax return (Modello 730 for employees or Modello Redditi PF for self-employed individuals) via the Agenzia delle Entrate website or through a qualified tax professional (CAF – Centro di Assistenza Fiscale).

Step 3: Review your assessment
After submission, the Agenzia delle Entrate will calculate your final tax position. You may receive a refund or be required to make an additional payment.

Payments are typically made in two installments:

• 40% by June 30, 2027

• 60% by November 30, 2027

Tax Tips for Expats in Italy

• Register for your Codice Fiscale as soon as you arrive, it’s required for all financial and legal transactions.

• Keep copies of receipts and expense records for at least five years.

• If you work remotely, clarify where your income is considered sourced to avoid double taxation.

• Check if you qualify for special regimes like the Impatriate Regime or the Flat Tax Regime for new residents.

• Use a certified accountant (commercialista) to ensure your deductions and credits are applied correctly.

Italy’s tax system might seem complex at first, but with the right information and support, it becomes manageable. Many expats find that the benefits of living in Italy far outweigh the paperwork.