IRPEF Tax Calculator 2026

IRPEF (Imposta sul Reddito delle Persone Fisiche — personal income tax) is the main direct tax in Italy. If you work in Italy as an employee, freelancer, or self-employed professional, IRPEF is the single largest deduction from your earnings. It is calculated using a progressive bracket system known as scaglioni: each portion of your income is taxed at a different rate, and only the income falling within that bracket is subject to that specific rate. This mechanism ensures that higher earners contribute a greater share of their income, in line with the principle of progressive taxation enshrined in Article 53 of the Italian Constitution.

Understanding IRPEF is essential for expats and foreign workers in Italy. Unlike flat-tax systems found in some countries, Italy's progressive structure means your effective tax rate (the average percentage of your total income paid in tax) is always lower than the marginal rate (the rate applied to your last euro of income). This distinction is crucial when evaluating job offers, negotiating salary packages, or planning your finances in Italy.

IRPEF Tax Brackets (Scaglioni) for 2026

Since 2024, confirmed as permanent for 2025 and 2026, Italy uses a simplified system of three tax brackets:

• Up to €28,000: 23% rate
• From €28,001 to €50,000: 33% rate
• Above €50,000: 43% rate

These rates apply to your reddito imponibile (taxable income), not your gross salary. Taxable income is calculated after deducting mandatory social security contributions (INPS) from your gross annual salary (RAL — Retribuzione Annua Lorda).

From Gross Salary to Net Pay: The Complete Path

The calculation starts with your RAL (gross annual salary) if you are an employee (lavoratore dipendente). Here is the step-by-step process that determines how much tax you actually owe:

First, INPS social security contributions at the employee's rate of 9.19% are deducted from the RAL to arrive at the imponibile fiscale (taxable income). Then, IRPEF lorda (gross IRPEF) is computed by applying the progressive bracket rates to this taxable income. From the gross IRPEF, you subtract applicable detrazioni (tax credits): employment income deduction, tax wedge deduction, and family dependents deduction. The result is the IRPEF netta (net IRPEF) — the actual income tax withheld from your pay.

On top of net IRPEF, you must also pay addizionali regionali e comunali (regional and municipal surcharges), which vary depending on your city and region of residence. For lower incomes, the trattamento integrativo (supplementary allowance, formerly known as the "Bonus Renzi") may provide an additional €100 per month in your paycheck.

Historical Evolution of IRPEF Brackets

Italy's IRPEF system has undergone significant transformations over the years, reflecting the fiscal policies of successive governments. Understanding this history helps expats appreciate the current system and anticipate possible future changes.

Until 2021, the system featured five brackets with rates of 23%, 27%, 38%, 41%, and 43%. This structure, largely unchanged since 2007, created a particularly steep jump between the second bracket (27%) and the third (38%), penalizing middle-income earners who crossed the €28,000 threshold.

The 2022 tax reform (Legislative Decree 230/2021) reduced the brackets to four: 23% up to €15,000, 25% from €15,001 to €28,000, 35% from €28,001 to €50,000, and 43% above €50,000. This change introduced meaningful relief for low-to-middle incomes by eliminating the 27% and 41% rates.

The most significant shift came in 2024, when the government merged the first two brackets into one, creating the current three-bracket system: 23% up to €28,000, 35% from €28,001 to €50,000, and 43% above. Initially introduced as a temporary measure, this structure was made permanent. With the 2025 Budget Law (Legge di Bilancio 2025), the second bracket rate was further reduced from 35% to 33%, delivering a concrete benefit to workers earning between €28,000 and €50,000. This three-bracket configuration with rates of 23%, 33%, and 43% is the one currently in force for 2025 and 2026.

Step-by-Step IRPEF Calculation Example

To illustrate concretely how IRPEF works, let us walk through a detailed example for an employee earning a RAL of €35,000 per year.

Step 1 — Determine Taxable Income: subtract the employee's INPS contributions from the RAL. For a private-sector employee, the contribution rate is 9.19% of gross pay. So: €35,000 × 9.19% = €3,216.50 in contributions. The taxable income is therefore: €35,000 − €3,216.50 = €31,783.50.

Step 2 — Apply the IRPEF Brackets: gross IRPEF is calculated by applying the progressive rates to the taxable income. On the first bracket (up to €28,000), you pay 23%: €28,000 × 23% = €6,440. On the portion exceeding €28,000 (€31,783.50 − €28,000 = €3,783.50), you pay 33%: €3,783.50 × 33% = €1,248.56. The total gross IRPEF is: €6,440 + €1,248.56 = €7,688.56.

Step 3 — Apply Tax Deductions (Detrazioni): the gross IRPEF is reduced by the applicable tax credits. For an employee with €31,783.50 taxable income, the employment income deduction (detrazione per lavoro dipendente) for the €28,000–€50,000 range is calculated as: €1,910 × (€50,000 − €31,783.50) / €22,000 ≈ €1,581. Additionally, the tax wedge deduction (detrazione cuneo fiscale) of €1,000 applies for incomes between €20,001 and €32,000. Net IRPEF is therefore: €7,688.56 − €1,581 − €1,000 ≈ €5,107.56.

Step 4 — Add Regional and Municipal Surcharges: on top of net IRPEF, regional and municipal surcharges (addizionali) are added, varying by place of residence. Assuming a region with an average rate of 1.73% and a municipality at 0.8%, the surcharges amount to roughly €550 + €254 = €804. The total annual tax burden comes to approximately €5,912.

The 2026 Tax Wedge (Cuneo Fiscale) and Its Impact on IRPEF

Starting from 2025, the previous INPS contribution cut (the 6–7% social security exemption) was replaced by a new structural mechanism that interacts directly with the IRPEF calculation. This cuneo fiscale (tax wedge) system operates on two distinct levels based on the employee's total income.

For incomes up to €20,000, a non-taxable bonus is paid directly in the payslip, calculated as a percentage of employment income. The percentage varies by income band: 7.1% for incomes up to €8,500, 5.3% for incomes from €8,501 to €15,000, and 4.8% for incomes from €15,001 to €20,000. This amount does not form part of taxable income for IRPEF purposes, so it benefits the worker in full without any tax being applied to it.

For incomes between €20,001 and €40,000, the benefit takes the form of an additional tax deduction that directly reduces the IRPEF owed. In the €20,001–€32,000 range, the deduction is a flat €1,000 per year. In the €32,001–€40,000 range, the deduction phases out progressively using the formula: €1,000 × (€40,000 − income) / €8,000, reaching zero at €40,000. This gradual phase-out (decalage) avoids the so-called "cliff effect" (effetto scalone), ensuring a smooth transition.

The interaction between the tax wedge and IRPEF is particularly important because the new system, unlike the previous contribution cut, does not reduce the social security base used for pension calculations. This means your future pension entitlement is not affected — a significant improvement over the temporary contribution exemptions of previous years. The cost of the benefit is borne entirely by the state through general taxation.