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Summary
Italy uses a PAYE-style system where employers withhold income tax (IRPEF - Imposta sul Reddito delle Persone Fisiche) and social security contributions (INPS) from each payslip. Italy reformed its IRPEF brackets in 2024, reducing from four to three bands. In addition to the national IRPEF, employees pay regional and municipal surtaxes that vary by location.
How it works
Your take-home pay is your gross salary minus three main deductions:
- INPS social security contributions - deducted first, reducing the taxable base for IRPEF
- IRPEF (national income tax) - progressive rates across three bands, applied to gross minus INPS contributions
- Regional and municipal surtaxes - additional flat-rate taxes that vary by region and municipality (typically around 2% combined)
An important detail: INPS contributions are deducted before calculating IRPEF, so the taxable income for IRPEF purposes is gross salary minus the employee INPS contribution.
Income Tax Bands (2025)
Italy’s IRPEF uses three brackets for 2025:
| Taxable income | Marginal rate |
|---|---|
| Up to €28,000 | 23% |
| €28,001 - €50,000 | 35% |
| Above €50,000 | 43% |
These are marginal rates - each rate applies only to the income within that band.
Italy also provides employee tax deductions (detrazioni per lavoro dipendente) that reduce the IRPEF due, scaling inversely with income. For incomes up to €15,000 the deduction is approximately €1,955; it tapers to zero around €50,000.
Social Security Contributions
Employee INPS contributions for private-sector salaried workers:
| Component | Rate |
|---|---|
| INPS IVS (pension insurance) | 9.19% |
| Additional contribution (above €55,448) | +1.00% |
The base 9.19% applies to all gross salary. For the portion of gross salary above €55,448 per year, an additional 1% is levied, making the effective rate 10.19% on income above that threshold.
INPS contributions are tax-deductible - they reduce the base on which IRPEF is calculated.
Regional and Municipal Surtaxes
On top of national IRPEF, employees pay:
- Regional surtax (addizionale regionale): set by each region, typically 1.2% to 3.3% of taxable income
- Municipal surtax (addizionale comunale): set by each municipality, typically 0% to 0.9%
A combined estimate of approximately 2% is common for many regions. Rates vary significantly - Lazio (Rome) charges a higher regional rate than Lombardy (Milan), for example.
The formula
Where
Worked example
EUR 35,000 gross annual salary (assuming ~2% combined surtax)
INPS contributions (9.19% of gross, under EUR 55,448 threshold)
= EUR 3,216.50
IRPEF taxable income
= EUR 31,783.50
IRPEF: first EUR 28,000 at 23%
= EUR 6,440
IRPEF: remaining EUR 3,783.50 at 35%
= EUR 1,324.23
Gross IRPEF
= EUR 7,764.23
Regional + municipal surtax (~2% of taxable income)
= EUR 635.67
Total deductions
= EUR 11,616.40
Result
Take-home pay = EUR 35,000 - EUR 11,616.40 = EUR 23,383.60/year (EUR 1,948.63/month)
Note: This example does not include the employee tax deduction (detrazione per lavoro dipendente) which would reduce the IRPEF amount further for incomes in this range.
Assumptions & limitations
- Uses the 2025 three-bracket IRPEF structure introduced by the 2024 reform
- The regional and municipal surtax estimate of ~2% is approximate - actual rates depend on the specific region and municipality
- Does not model the employee tax deduction (detrazione per lavoro dipendente), which reduces IRPEF for employees and tapers with income
- Does not model the bonus EUR 100/month (ex-Renzi bonus / trattamento integrativo) for low earners with income up to €15,000 (or conditionally up to €28,000)
- Assumes private-sector salaried employment - public sector and certain categories have different INPS rates
- Does not model employer INPS contributions (~30% of gross), which are not deducted from the employee’s salary
- Italy pays in 13 or 14 monthly instalments (tredicesima/quattordicesima) - the annual figures shown are the same regardless of instalment count