Most of what a new resident needs to know about Italian tax comes down to one line drawn early: whether Italy treats you as a tax resident. On one side of that line Italy taxes only your Italian income. On the other, it taxes your worldwide income at rates that reach the low forties, and it also reaches your foreign accounts and property.
The rates themselves are not the whole story, because a great deal of income is taxed at flat "substitute" rates rather than the progressive scale, and Italy runs a set of special regimes that can cut a resident's bill sharply for a fixed number of years. None of this makes Italy a high-tax country by default. The headline income tax rates are high, but with the right structure the effective burden is often very reasonable, and Italy's property and inheritance taxes are both low by international standards.
This guide is the beginner's map for new residents, meaning anyone who becomes tax resident in Italy, whether a foreigner moving here or an Italian citizen who has never actually lived in Italy. It covers getting set up, when Italy taxes you, what the ordinary rates are in 2026, the flat substitute taxes, the special regimes, social contributions, the taxes on foreign assets and property, inheritance tax, relief from double taxation, the filing and payment calendar, and the extra layer that applies if you are American.
The short answer
If you are tax resident in Italy, Italy taxes your worldwide income,1 much of it on a progressive scale that runs from 23% to 43% plus regional and municipal surcharges, though a large part of investment and rental income is taxed instead at flat substitute rates. If you are not resident, Italy taxes only the income you earn from Italian sources.2 Residency, not citizenship or the visa you hold, is what decides this, and it turns on where you actually live and spend your time, not on paperwork alone.3
Many people move to Italy precisely because a resident can often avoid the full scale. Italy offers four main regimes: a halving of employment income for incoming workers, a flat annual charge for the wealthy on all foreign income, a 7% rate for foreign pensioners who settle in the south, and a light flat-rate regime for small businesses. Each has its own conditions and runs for a fixed period, and you generally pick one. Getting the choice and the timing right, before you move, is worth more than any deduction you will find afterward.
First, get a codice fiscale
Before anything else you need a codice fiscale, the Italian tax identification code. It is used for almost every administrative and financial act, from opening a bank account to signing a lease to being paid, and you will be asked for it constantly. It is free, it is not the same as being tax resident, and getting one does not by itself create any tax liability. Getting a codice fiscale explains how to obtain one without paying an intermediary.
When does Italy tax you, and on what
Italy taxes residents on their worldwide income1 and non-residents only on their Italian-source income,2 so the residency question comes first and everything else follows from it.
You are tax resident for a year if, for more than 183 days of it, any one of these is true:
- you are registered with the resident-population registry of an Italian municipality;
- your main home, in the sense of your personal and family ties, is in Italy;
- your habitual abode is in Italy;
- you are simply physically present in Italy for that many days.3
The 2024 reform made physical presence a test in its own right and defined the "personal and family ties" limb explicitly, which matters for anyone who keeps a foot in two countries. Any single one of these is enough, so you cannot be non-resident merely because you never registered, if your life is plainly here. The date your residence begins also sets the clock for the regimes below, so it is worth pinning down rather than leaving to chance. We cover the tests and the traps in detail in our guide to Italian tax residency.
Two points catch people out. The first is that the visa you enter on does not set your tax position: you can be tax resident without a long-term visa and, conversely, holding a residence permit does not by itself make you resident for tax if you are not actually here. The second is that Italy generally treats residency as covering the whole tax year once acquired, so a mid-year arrival does not neatly split your year in two.
What Italy counts as income
Italy sorts income into categories, each with its own rules: employment, self-employment for professionals, business, land and buildings, capital and financial income, and a catch-all "other income" that sweeps in many capital gains.4 The category matters because it decides how the income is taxed, and in particular whether it lands on the progressive scale or under one of the flat substitute taxes described below. A salary and a freelancer's fees go on the scale; a dividend or a bond coupon usually does not.
The ordinary income tax rates in 2026
For 2026 the national income tax on individuals runs on three bands, before the regional and municipal surcharges that most comuni add on top:5
Regional surcharges generally run between roughly 1.2% and 3.3%, and municipal surcharges up to about 0.9%, so the real top marginal rate sits a few points above 43%. Employees and pensioners get deductions that lower the effective rate at the bottom of the scale, and the self-employed carry separate social contributions on top, which the income tax rates alone do not show. To put your own numbers through the current brackets, use our tax calculator.
These are the rates the substitute taxes and regimes below are measured against.
Substitute taxes: when a flat rate applies instead
Much of the income a newcomer expects to be taxed on the progressive scale is not. Italy applies flat "substitute" taxes to most investment and rental income, in place of ordinary income tax.
Interest, dividends, and gains on most securities are generally taxed at a flat 26%, with a reduced 12.5% for Italian government bonds and equivalent white-listed public issuers, which we set out in our guide to the 12.5% rate on government bonds.6 Gains on crypto-assets are taxed at 33% from 2026, up from 26%.7 Residential rents can be taxed under an optional flat regime, the cedolare secca, at 21%, or 10% for controlled-rent contracts, with a 26% rate applying to short lets beyond a single property.8 These flat taxes replace the scale for the income they cover, which is why an investor and a salaried employee on the same headline income can face very different effective rates. The special regimes in the next section are themselves substitute taxes, applied to whole categories of income at once.
The special regimes that change the picture
Italy has built a suite of incentives to attract people to move here, and for most new residents one of them, not the ordinary rates, is what determines the bill. You generally qualify for one, not several, and the right choice depends on why you are moving and what your income looks like.
The impatriate regime is the one most working arrivals use. It removes half of your qualifying Italian employment or self-employment income from tax for five years, more than half if you bring a minor child, subject to conditions on prior non-residence and qualification.9 It is the single biggest lever for most people who move to work, and our full guide to Italy's impatriate regime covers the conditions, the 2027 cutoff, and the numbers.
The neo-residenti flat tax is aimed at the wealthy. Instead of taxing foreign income on the scale, it charges a fixed amount each year, which has risen to 300,000 euro for people who move from 2026, plus 50,000 euro per family member, and it covers all foreign-source income for up to fifteen years.10 From 2027 it can no longer be combined with the impatriate regime, so someone with both large foreign wealth and Italian earnings must choose between the two.10 It only makes sense above a high income threshold, and for some nationalities it interacts badly with the home-country system, so it needs to be modeled, not assumed.
The 7% regime is for foreign pensioners. If you draw a foreign pension and move your residence to a qualifying town in one of eight southern regions, or a designated earthquake-affected town, Italy taxes all your foreign income at a flat 7% for ten years.11 A 2026 change widened the field by raising the town-size limit from 20,000 to 30,000 inhabitants, so more places now qualify. You can check which comuni are eligible on our interactive 7% tax map.
The forfettario is the regime for small operators: a single substitute tax, 5% for the first five years of a new activity and 15% after, applied to a fixed percentage of your turnover, available while your revenue stays under the ceiling.12 It is often the simplest and lightest option for a freelancer or sole trader, but it cannot be combined with the impatriate regime, so the two have to be weighed against each other, which is what our comparison of the impatriate and flat-rate regimes does.
Social security contributions
Income tax is not the only charge on people who work in Italy. Social security contributions to the national institute, INPS, are separate, sit on top of income tax, and are not reduced by the regimes above. Employees have most of the contribution borne by the employer with a smaller share withheld from pay; the self-employed generally pay into a dedicated scheme at roughly 26% of income.13 For an incoming worker this is a real cost the headline tax saving does not touch, so it belongs in any calculation. Americans who move temporarily can often stay in the US system and obtain a certificate of coverage, which exempts them from the Italian contribution and stops them paying into both.
Tax on your foreign assets
Becoming resident does more than expose your foreign income. It also brings your assets abroad into the Italian system, and this is the part newcomers most often miss.
Italy levies two small annual wealth taxes on assets held outside the country: one of a little over 1% on foreign real estate, and one of 0.2% on foreign financial assets such as bank and investment accounts, doubled for assets held in blacklisted jurisdictions.14 Separately, you must declare your foreign holdings each year on a dedicated monitoring section of the return, and the penalties for not declaring apply even when no tax is due.14 The charges are modest for most people, but the reporting obligation is strict, and it reaches accounts a new resident might assume are beyond Italy's view. Our guide to IVIE, Italy's wealth tax on foreign real estate, works through the mechanics and the planning, including the companion charge on financial assets. The neo-residenti flat tax and the 7% regime switch most of these charges and reporting duties off for the assets they cover, which is part of what makes them valuable.
Buying or renting out Italian property
Buying property in Italy brings its own taxes, separate from income tax: one-off purchase taxes that depend on whether you buy from a private seller or a business and whether it will be your main home, and then annual local taxes on second homes.15 We set out the full picture in our guide to the taxes you pay on Italian houses.
If you rent property out, the income is taxable in Italy, and the cedolare secca described above is often the better option for residential lets. Rental income you earn abroad is also taxable once you are resident, but only on the net already reported in the other country, not the gross,15 a distinction that saves real money; see how foreign rental income is taxed in Italy.
Inheritance and gift tax
Italy also taxes inheritances and gifts, and by international standards the rates are low: 4% on transfers to a spouse or direct-line relatives, with a 1 million euro exemption per beneficiary, 6% to siblings and other close relatives, and 8% to everyone else, the last two with little or no exemption.16 For a resident, worldwide assets are in scope; for a non-resident, only assets located in Italy. It is an easy tax to overlook when planning a move, but it can matter a great deal to families holding significant wealth, and the residency question drives it just as it drives income tax.
Relief from double taxation
If the same income is taxed both abroad and in Italy, you are generally not simply taxed twice. Italy gives a credit for tax paid abroad on foreign income, and its network of treaties allocates taxing rights between the two countries and caps the rates each may charge.17 The relief is not automatic in the sense of requiring no work: it has to be claimed correctly on the return, and treaty positions have to be documented. It also has a hard limit. Income taxed under one of Italy's flat substitute taxes does not enter the ordinary return, so no foreign tax credit runs against it, and foreign investment income collected from abroad is generally taxed on the amount net of the foreign tax already withheld, the netto frontiera basis, which leaves that foreign tax unrecovered.17 For an incoming investor this is the most common source of residual double taxation, and our analysis of US municipal bonds and the 12.5% rate works a concrete case where the numbers happen to fall favorably. For US persons the mechanics largely run the other way, with the US foreign tax credit doing much of the work, which we explain in our guide to the foreign tax credit for Americans in Italy.
The tax calendar: filing and paying
Italy's tax year is the calendar year, and residents file an annual income tax return with the Agenzia delle Entrate (AdE), the Italian revenue authority, after the year ends. Employees and pensioners with simple affairs can use the simplified 730 return, a partly pre-filled short form; everyone else files the ordinary Modello Redditi return, submitted electronically in the autumn.18
Payment does not line up with filing. The balance for the prior year and the first advance for the current year fall due by 30 June, with an option to pay by 30 July for a small surcharge, and the second advance falls due by 30 November.18
Payments are made on the F24 form, generally through an Italian bank account, and most people file through a commercialista (a licensed accountant) or a CAF (a public tax-assistance office) rather than alone. Americans have to run this alongside the separate US calendar, which we lay out in our US-Italy dual filing calendar.
The extra layer if you are American
For most new residents, moving to Italy means Italy takes over as the primary taxing country and the home country steps back. For Americans it does not work that way, because the United States taxes its citizens on worldwide income wherever they live. That leaves a US person managing two systems at once, and the treaty between the two countries does less to reconcile them than people expect, because a clause in it lets the United States keep taxing its citizens almost as if the treaty were not there.19 We map the whole interaction in our US-Italy tax treaty guide.
Three consequences matter most. Americans still file and often still owe in the United States, so the Italian regimes have to be modeled against the US result rather than in isolation, and we cover the Italian side of that in what income tax you pay in Italy as an American. Ordinary American investments, especially mutual funds and ETFs, can be taxed punitively once you are resident, so the portfolio usually needs restructuring before the move, which we explain in how to invest as an American in Italy. And the reporting duties stack: on top of Italy's monitoring form, a US person must report foreign accounts to the United States, as we set out in our guide to reporting your Italian accounts to the IRS.
Practical implications
Get the basics in place first. A codice fiscale, an Italian bank account, and a clear record of your move dates make everything else easier and are needed before you can pay tax at all.
Settle your residency deliberately. It decides whether Italy taxes your worldwide income or only your Italian income, and the date it begins sets the clock for every regime. Treat the move date as a decision, not a formality.
Choose the regime before you arrive. The impatriate regime, the neo-residenti flat tax, the 7% pensioners regime, and the forfettario suit different people and mostly cannot be combined, and some turn on where in Italy you settle.
Map your foreign assets and income types early. Residency pulls your accounts and property abroad into Italian wealth tax and annual reporting, and how each stream of income is taxed, on the scale or at a flat rate, changes the plan.
If you are American, run both countries together. The Italian regime and the US result are one calculation. Model them jointly, and deal with your investment accounts before you become resident rather than after.
The bottom line
Tax in Italy for a new resident is decided in two moves: whether you are resident, and how each part of your income is taxed if you are. Residency turns on where you actually live, not on your passport or your visa, and it brings your worldwide income and your foreign assets into the Italian system. Against that, the flat substitute taxes and the special regimes make Italy one of the cheaper places in Europe to be taxed for a fixed window, provided you qualify for the right regime and time the move around it. The people who do best are the ones who decide all of this before they arrive, not after the first Italian return lands.
Frequently asked questions
When do I become an Italian tax resident?
For a given year, once you spend more than 183 days in Italy or your main home and life are here. Any one of the tests is enough: registration with the resident-population registry, your center of personal and family ties, your habitual abode, or simple physical presence past that threshold. Because residency is generally assessed for the whole calendar year, the day you cross the line can pull the entire year into Italian tax.
Does my visa or residence permit decide my tax residency?
No. Tax residency turns on where you actually live and how long you are present, not on the immigration status you hold. You can be tax resident without a long-stay visa, and holding a permit does not make you resident if your life is genuinely elsewhere. If you entered on the digital nomad visa in particular, note that the visa makes you an Italian tax resident; it does not exempt you.
I am an Italian citizen who has never lived in Italy. Do these rules apply to me?
Yes. Residency for tax turns on where you live, not on your passport, so an Italian citizen moving to Italy for the first time is a new resident on the same footing as any foreigner. Citizenship matters for other things, and if you are also a US citizen the American layer still applies, but it does not change when Italian residency begins or how the regimes work.
Once I am resident, do I pay Italian tax on income I keep abroad?
Yes. Residents are taxed on worldwide income, so a salary, pension, or investment return paid abroad into a foreign account is still taxable in Italy, subject to relief for tax already paid in the other country under the relevant treaty. Where the money is paid does not change where it is taxed.
When is the best time of year to move?
It is worth planning rather than leaving to chance. Because residency is usually assessed for the whole year once you pass the day threshold, the side of the year you move can decide whether your first year counts as an Italian tax year at all, and it starts the clock on any regime you elect.
Which regime might I qualify for, and can I combine two?
Broadly, incoming workers look at the impatriate regime, wealthy arrivals with large foreign income at the neo-residenti flat tax, foreign pensioners at the 7% regime, and small businesses at the forfettario. You generally qualify for one, and they mostly cannot be stacked: the impatriate regime and the forfettario are mutually exclusive, and from 2027 the neo-residenti flat tax can no longer be combined with the impatriate regime. You choose the one that fits your situation.
Should I move or restructure my foreign investment accounts before I arrive?
Often yes, and it is far easier before you are resident. Some common foreign holdings are taxed unfavorably once you live in Italy, and non-Italian pooled funds are a particular trap for US citizens, so portfolios frequently need reshaping ahead of the move rather than after. Whatever you hold also becomes reportable and subject to the small annual asset taxes once you are resident.
Why is my investment income taxed differently from my salary?
Because Italy taxes most investment and rental income at flat substitute rates rather than on the progressive scale. Interest, dividends, and most securities gains are generally taxed at 26%, government bonds at 12.5%, and residential rents can use the cedolare secca. A salary, by contrast, goes on the 23% to 43% scale.
When are Italian taxes due?
The return is filed electronically in the autumn, but payment comes earlier: the balance for the prior year and the first advance for the current year by 30 June (or 30 July with a small surcharge), and the second advance by 30 November. Payments are made on the F24 form.
What foreign assets must I report each year?
Once you are resident, foreign accounts and assets go on an annual monitoring section of the Italian return, and small annual wealth taxes apply to them. The reporting duty stands even where no tax is due, and the penalties for missing it are not trivial. US citizens also report their foreign accounts separately to the United States.
Not sure which side of the residency line you fall on?
Book a free consultation. We will map whether Italy treats you as resident, which regime fits your situation, and, if you are American, how the Italian and U.S. sides fit together.
Book a Free Consultation →Sources & Legal References
- Worldwide taxation of residents: arts. 1 and 3 of the Italian income tax code (TUIR); residents are taxed on income wherever produced. ↩
- Source-based taxation of non-residents: art. 23 TUIR sets out the categories of Italian-source income taxable to non-residents. ↩
- Tax residency of individuals: art. 2 TUIR, as amended by the 2024 international-tax reform. An individual is resident for a tax year if, for the greater part of the year (more than 183 days), any one of the following applies: registration with the resident-population registry, domicile in Italy (defined as the place where personal and family relations mainly develop), habitual abode in Italy, or physical presence in Italy. ↩
- Categories of income: art. 6 TUIR, which classifies income into land and buildings, capital, employment, self-employment, business, and other income, each with its own rules of determination. ↩
- Individual income tax (IRPEF) brackets for 2026, before regional and municipal surcharges: 23% up to 28,000 euro; 33% (reduced from 35%) over 28,000 and up to 50,000 euro; 43% over 50,000 euro, under the 2023 income-tax reform as amended by the 2026 budget law. Regional surcharges generally range from about 1.23% to 3.33% and municipal surcharges up to about 0.9%. ↩
- Financial income: substitute tax of 26% on most interest, dividends, and capital gains on financial instruments, with a reduced 12.5% on Italian government securities and equivalent white-listed public issuers. ↩
- Crypto-assets: capital gains taxed at 33% from 1 January 2026 (raised from 26%), under the 2025 budget law; the previous small exemption threshold was removed from 2025. ↩
- Cedolare secca on residential rents: optional substitute tax of 21% for ordinary leases, 10% for controlled-rent (canone concordato) contracts, and 26% for short lets beyond a single property chosen by the landlord, under art. 3 of Legislative Decree 23/2011 as amended by the 2024 budget law. ↩
- Impatriate regime: art. 5 of Legislative Decree 209/2023, for transfers of residence from 2024, taxing 50% of qualifying employment and self-employment income produced in Italy (40% with a resident minor child), up to 600,000 euro per year, for five tax periods. ↩
- New-resident (neo-residenti) substitute tax: art. 24-bis TUIR, a substitute tax on all foreign-source income for individuals not resident in Italy for at least nine of the preceding ten years; 300,000 euro for transfers of residence from 2026 and 50,000 euro per family member, for up to fifteen years. Lower amounts apply to earlier arrivals. From 2027 it cannot be combined with the impatriate regime (art. 2 of Decree-Law 38 of 27 March 2026). ↩
- Foreign-pensioner 7% regime: art. 24-ter TUIR, a 7% substitute tax on all foreign-source income for holders of a foreign pension who transfer residence to a municipality in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, or Puglia, or a designated earthquake-affected municipality, within the population threshold, for ten years. Law 34/2026 raised the threshold from 20,000 to 30,000 inhabitants. ↩
- Forfettario regime: Law 190/2014, a substitute tax of 15% (5% for the first five years of a new activity) on a fixed percentage of turnover, available up to a revenue ceiling of 85,000 euro; not combinable with the impatriate regime. ↩
- Social security contributions: employee contributions largely borne by the employer with a smaller employee share; self-employed professionals contribute to the INPS gestione separata at approximately 26% for 2025. Contributions are separate from income tax and are not reduced by the tax regimes. ↩
- Wealth taxes and monitoring of foreign assets: IVIE on foreign real estate (a little over 1%) and IVAFE on foreign financial assets (0.2%, doubled for blacklisted jurisdictions) under art. 19 of Decree-Law 201/2011, and the annual foreign-asset monitoring obligation under art. 4 of Decree-Law 167/1990. The new-resident and 7% regimes exempt covered foreign assets from these charges and reporting. ↩
- Italian property taxes: purchase taxes (registration tax or VAT plus fixed duties, at rates that differ for a main home and for purchases from a private seller or a business) and the annual municipal property tax (IMU) on properties other than a main home. Foreign rental income of a resident is taxed on the net amount declared in the other State where it is taxed there, under art. 70 of the Italian income tax code. ↩
- Inheritance and gift tax: Legislative Decree 346/1990, as reformed by Legislative Decree 139/2024. Rates of 4% for a spouse and direct-line relatives (1 million euro exemption per beneficiary), 6% for siblings (100,000 euro exemption) and other relatives to the fourth degree, and 8% for all others (no exemption). Residents are taxed on worldwide assets, non-residents on Italian-situs assets only. ↩
- Relief from double taxation: foreign tax credit for taxes paid abroad under art. 165 TUIR, together with Italy's bilateral tax treaties allocating taxing rights. Income subject to a substitute tax does not concur to total income and so falls outside the art. 165 credit; foreign financial income is generally taxed on the amount net of foreign tax (the netto frontiera basis), with that foreign tax not recovered. ↩
- Filing and payment: annual return on the Modello Redditi PF (or the simplified Modello 730), filed electronically in the autumn; balance and first advance due 30 June, with a 30 July option subject to a 0.4% surcharge, and second advance due 30 November, under art. 17 of Presidential Decree 435/2001. Payments are made on Modello F24. ↩
- US taxation of citizens on worldwide income and the treaty saving clause: Article 1 of the US-Italy income tax convention. ↩
The information in this article is provided for general informational purposes only and does not constitute financial, legal, tax, or accounting advice. How Italy taxes you depends on your residency, income mix, the regime you qualify for, and, where relevant, your home-country tax system. Any opinions expressed are those of the author and do not necessarily reflect the views of JSBC. You should not act or refrain from acting on the basis of this content without first seeking advice from a qualified professional regarding your particular circumstances.