Income Tax Brackets In Italy

IRPEF (Imposta sul reddito delle persone fisiche), a progressive income tax that applies to all workers, is levied on employment income. The tax rate established by the government is based on income, but the regions may tack on an extra 0.7% to 3.33%. Along with a regional income tax, each area may also levy a municipal income tax, anywhere between 0.1% and 0.9%. Municipalities also have the authority to set progressive tax rates corresponding to national income levels.

What Is The Income Tax In Italy?

The Irpef is applied to the person’s overall income. Applying the tax rates by a bracket to the entire income after deducting expenses results in gross tax. The only source of income for non-resident subjects is revenue earned in Italy. For resident subjects, the gross tax is computed by applying the tax rates by brackets to the entire income, net of deductible charges. Non-resident subjects can only lower their total income with some deductible charges, such as contributions. Certain deductions from gross tax, such as those for employee expenditures, renovation-related costs, or certain types of gifts, are allowable for non-resident persons

Income tax table

Taxable income bracket		Total tax on income below bracket	Tax rate on income in bracket
From EUR	To EUR	EUR	Percent
0	15,000	0	23%
15,001	28,000	3,450	27%
28,001	55,000	6,960	38%
55,001	75,000	17,220	41%
75,001	over	25,420	43%

You may use the Italy income tax calculator to determine your wage tax. It will show you your Total Tax Paid, Net Annual Salary, Net Monthly Salary, and Net Weekly Income. 

How To Reduce Your Tax In Italy?

Specific costs may reduce a taxpayer’s gross income under Italian tax law, and the usage of tax credits may reduce a taxpayer’s tax liability.

Employment Expenses

Contrary to other nations that allow an employment costs deduction in assessing taxable income, Italy has developed a system of tax credits concerning employment income 

The following are the primary deductions from employment taxable income, provided that the prerequisites specified by law are satisfied:

• Mandatory social security contributions made by employees are entirely deductible.
• A deduction of up to EUR 5,164.57 is allowed for contributions to the designated supplemental pension plans.

Personal Deductions

The following are the primary deductions from gross taxable income if they have not already been subtracted from each type of income, provided that the requirements required by law are satisfied:

• Mandatory social security contributions made by employees are entirely deductible. 
• Up to EUR 1,549.37 in social security contributions are made for domestic workers.
• Disability-related medical costs are entirely deductible.
• Contributions paid to the complementary pension funds are deductible up to EUR 5,164.57.
• Voluntary social security payments made to the required pension program.

The alimony given to a separated or divorced spouse as a consequence of a court order may be entirely deducted by an individual from taxable income.

Remember that only the component linked to the separated spouse is tax deductible; the portion related to child support is not.

Charitable Contributions

Up to EUR 1,032.91 in donations to specific religious organizations may be deducted from taxable income (per taxpayer).

Personal Exemptions

Italy has implemented a tax credits system, unlike other nations that provide personal exemptions and allowances in assessing taxable income.

Conclusion

Italy has no tax classes; instead, the National Income Tax (NIT) is calculated using a progressive tax rate that applies to both residents and non-residents. If you have moved to Italy and are planning to earn an income, no matter how small, you will need to pay taxes in Italy on your worldwide income and assets. It makes sense that someone unfamiliar with the Italian tax system would have questions, especially given how difficult it can be to understand and negotiate the Italian tax system. This guide will help you understand Italy’s income tax rates if you have any questions.