Taxes in Italy 2026: IRPEF, IVA, deductions

If you are relocating to Italy and have read mostly about regime forfettario, it is easy to decide that the simplified regime is the country's tax system. This is not so. Forfettario is merely a preferential add-on for part of the self-employed; beneath it lies the ordinary tax system (regime ordinario) with a progressive scale, by which employees, business, and everyone for whom the preferential regime is unavailable live by default. This breakdown is a deliberately simplified map of the ordinary regime for those just entering the topic. This is an overview based on community experience, not legal or tax advice: any rates, thresholds, and dates are time-sensitive, so check on the official portal agenziaentrate.gov.it and with a licensed accountant (commercialista).

It is convenient to estimate the load and compare it with forfettario against your turnover in the calculator:

What the ordinary regime (ordinario) is

The ordinary regime is the basic procedure for taxing the income of individuals in Italy. Unlike forfettario, where income is taxed at a single reduced rate on an imputed share of revenue, in ordinario a progressive scale and an entirely different accounting logic apply. Briefly, how ordinario differs from the preferential regime based on community experience:

• the income goes by the progressive IRPEF scale, not a single rate;
• on top are added the regional and municipal surcharges (addizionale regionale e comunale);
• IVA (VAT) appears - you charge it to clients and remit it to the state;
• you can deduct the real expenses of the activity, not just a fixed coefficient;
• the reporting is more complex, the accounting costlier, and you usually cannot manage without an accountant.

The main practical takeaway according to the community: ordinario is not a "punishment" or a "fallback option". For some people it is disadvantageous (a simple self-employed person with small expenses almost always loses to forfettario), for others it is the only available or even more advantageous regime (large real expenses, an excluding activity code, an exceeded turnover limit). Which regime is yours is determined not by preference but by the structure of the income.

IRPEF: the progressive scale on individuals' income

IRPEF (Imposta sul reddito delle persone fisiche) is the Italian tax on the income of individuals. It taxes income from employment and pensions, from self-employment (lavoro autonomo) and business, from owning real estate, from capital, and a number of other categories. The basic logic of the progressive scale is built in brackets: different rates apply not to the whole income at once but to its parts within each band.

The approximate brackets cited in chats, which correspond to the latest published rates (verify the current ones on agenziaentrate.gov.it - they change almost every year):

• 23 percent - on income roughly up to 28000 euro;
• 35 percent - on the part of income roughly from 28000 to 50000 euro;
• 43 percent - on the part of income above roughly 50000 euro.

A key point that many understand incorrectly: the rate of the top bracket does not apply to the whole income. For example, with an annual income of around 40000 euro the first 28000 is taxed at 23 percent, and only the remainder (around 12000) - at 35. So the phrase "I fell into 35 percent" does not mean the whole income is taxed at 35 - it works only for the part above the boundary.

In simplified terms the tax calculation on the ordinary regime looks like this: add up the income across all categories, subtract from it the expenses and deductions that the law allows (this gives the tax base), apply the scale's rates to the base, and then subtract the tax credits (detrazioni), if you are entitled to them. An important caveat according to the community: the composition of what is deductible differs for residents and non-residents - for non-residents it is heavily cut down, whereas residents enjoy a noticeably broader list of benefits (especially with children, dependents, and expenses on their own housing). The details of the rule itself lie in the TUIR - the consolidated law on income tax (DPR 917/1986); from 01.01.2027 it is replaced by the new Testo unico (D.Lgs. 117/2026), where the IRPEF scale stays in art. 11.

For a sole trader on the ordinary regime the picture is made up of several layers: the progressive IRPEF (in the range of 23-43 percent depending on income), on top the regional and municipal surcharges, separately IVA if the client is in Italy, and another roughly a quarter of the base - INPS contributions. The accounting on ordinario is costlier than on the preferential regime, and keeping it yourself is almost impossible. So the decision between regimes is better calculated on the figures before opening the activity.

At first I did not understand the mechanics and thought the whole income would be taxed at the top rate - a frightening figure came out. In reality the brackets are calculated by parts: the lower piece at 23, and only what is above the boundary, at a higher rate. After recalculating, the load came out noticeably more reasonable, but still tangibly more than on forfettario.

The regional and municipal surcharges (addizionali)

In addition to the main state IRPEF, on the ordinary regime you also pay two surcharges according to the place of tax residency:

• addizionale regionale - the regional surcharge. The basic rate is a little over a percent, but each region has the right to raise it by its own law (a cap of around plus two percentage points is cited). So the final regional rate varies greatly: somewhere it is one rate on all income, somewhere - brackets by income size.
• addizionale comunale - the municipal surcharge. It is set by each comune separately, it is usually smaller than the regional one (fractions of a percent), but it too depends on where exactly you are registered.

According to the community this is the "invisible" part that for employees is quietly withheld from the salary together with the main tax, and which is easy to forget when estimating the load only by the main IRPEF scale. Check the specific rates of your region and comune with an accountant and on agenziaentrate.gov.it - they are regional and time-sensitive, they cannot be written into a "default" map.

When I calculated my future salary, I went only by the main scale - and was surprised why less comes out in hand. It turned out that on top there quietly sit the regional and municipal surcharges, they are withheld together with the main tax. The amount is small in percentage, but on an annual scale tangible, and it is better to build it into your calculation right away.

Detrazioni and deduzioni: deductions and benefits

On the ordinary regime - unlike forfettario - the tax can be reduced through deductions of two types: deduzioni are subtracted from the tax base before the rates are applied (for example, the INPS contributions paid), while detrazioni are subtracted from the already-calculated tax (according to the community - mortgage interest, renovation, education, medical expenses, children and dependents). Broad access to deductions is one of the arguments in favour of ordinario for those who have something to deduct, but part of the benefits work only for tax residents and require fulfilling conditions. Which deductions exist, how they are calculated and how to claim them through the 730 or Redditi PF is covered in the separate breakdown Tax deductions in Italy: 730, medical costs; what you are entitled to specifically is a question for the accountant.

IVA (VAT): the basics for those on the ordinary regime

IVA (Imposta sul valore aggiunto) is the Italian VAT. The main difference from forfettario here is fundamental: on the preferential regime you do not charge IVA, while on the ordinary one you charge it and remit it to the state. The basic reference points according to the community:

• the main rate is 22 percent; there are reduced rates on certain categories (in particular, 10, 5, and 4 percent on a number of goods and services are cited);
• IVA is a tax "on top": you add it to your invoice to the client. Notionally, you sell a service for 100 - you invoice 122, of which 100 is your income, and 22 you remit to the budget;
• on the ordinary regime the input IVA on business expenses can be partly or fully reclaimed (credited), which forfettario does not have.

According to the community it is precisely the appearance of IVA and the accounting associated with it that is one of the reasons why ordinario is heavier in administration: periodic calculations and reporting are added, and managing them without an accountant works out for far from everyone. Verify the specific rates for your goods and services and the crediting procedure on agenziaentrate.gov.it and with a commercialista.

On the general system IVA lies on top of the income: you invoice the client 122, but income is counted as 100, and 22 go to the state. Then from this hundred you still pay the income tax and contributions. When you first lay this out on the shelves, you understand why many cling so to the preferential regime while it is available.

How ordinario differs from forfettario - and who falls where

To bring it all together: for the self-employed in Italy there are two main regimes - the preferential forfettario and the ordinary ordinario. The difference based on community experience:

In the ordinary regime, according to the community, end up, in particular:

• employees (lavoro dipendente) - their tax on the ordinary scale is withheld by the employer as a tax agent, a separate preferential regime is inapplicable to a salary;
• those who exceeded the turnover limit of forfettario or whose ATECO code excludes the preferential regime;
• those with large real expenses for whom it is more advantageous to deduct them than to pay on the imputed share;
• business in the form of a company (there is its own combination there - corporate IRES and regional IRAP, this is a separate topic).

Separately it is worth knowing about imposta sostitutiva (the substitute tax): for certain types of income, instead of the ordinary scale, a separate fixed rate applies. Thus, profit from the sale of real estate or capital gains (including crypto) is often taxed at a single rate and is not added to the rest of the income on the progressive ladder. Forfettario itself is also a kind of substitute tax. There is also a separate preferential regime for wealthy new residents - the fixed tax on foreign income.

A common trap is the mindset "the accountant will solve everything". The accountant will solve what you bring them. And you need to bring the correct model: who you are by status, how and from where you receive income, where you actually live, what documents the employer and clients have. Complaints about "different answers" are usually not because the specialists are bad but because people come with an erroneous understanding of their tax status and regime. First sort out the model, then calculate the regime.

Codice fiscale and tax residency (183 days)

Two basic things, without which a conversation about taxes in Italy makes no sense.

Codice fiscale - the individual tax code (analogous to an INN). It is needed for literally everything: a rental contract, a bank account, a contract, dealing with the tax authority. It is not a tax status in itself but an identifier; you can calculate and break down your code in the tool, and the details of obtaining it - in the section about digital identity and SPID.

Tax residency - this is what actually determines on what scope of income you will be asked. According to the community the classic marker is residing in Italy for more than 183 days a year. But this is a simplification: the tax authority looks wider - at the centre of life interests (family, housing, main activity) and at the registration steps (registration, residenza). It is important not to confuse two different concepts: getting a residence permit (migration status) and becoming a tax resident are not the same thing.

The practical consequence, which is repeated constantly in chats: as soon as you become a tax resident of Italy, the country generally expects from you a return on worldwide income (reddito mondiale) - that is, on the income from abroad too, not only the Italian one. Previously the double-taxation avoidance agreement with Russia helped smooth out double taxation, but its operation has been suspended since around 2023, so crediting the tax paid in Russia is now not automatic. This is critical, for example, for those who try to keep "officially working" for a Russian employer while already living in Italy: the load may turn out to be unexpectedly high. More about worldwide income and renewal with regard to residency - in the article about the 183-day rule and renewal.

"I will not spend 183 days - so Italy is none of my business" - a popular but dangerous simplification. 183 days is only one marker; in parallel they look at the centre of life interests, the actual residence, and the registration actions. The desire "to live but not become a resident" is encountered often, sometimes it works out that way, but this is precisely the area where you need to calculate in advance and document the facts, rather than hoping for luck.

I registered, lived more than half the year - and the tax authority already counts me a resident, with all the obligations on worldwide income. For some reason I thought that while without a partita it did not concern me, but residency is counted not from the fact of business but from the fact of living in the country. It is better to understand this before the move, not in the first return.

How an immigrant should think about this at the start

A few practical reference points based on community experience (not as an instruction but as a way not to make costly errors):

• Do not count forfettario as automatically "yours". First understand whether it is available by the ATECO code and the limit, and whether it is advantageous given your real expenses. Regimes must be compared before opening the activity.
• Build in the full load, not just the main rate. On ordinario this is IRPEF plus addizionali plus IVA plus INPS contributions - the sum is made up of layers, and each layer is easy to forget.
• First the model, then the accountant. Bring the specialist a clear picture: status, source of income, where you live, what documents. On this depend both the regime and the correctness of the calculation.
• Residency decides more than it seems. 183 days and the centre of interests determine on what scope of income you will be asked; think this through before the return deadline comes around.
• All figures are time-sensitive. The IRPEF brackets, the addizionali rates, and the reduced IVA rates are revised, so verify any amount on agenziaentrate.gov.it for your year.

Once again: this is an overview map based on community experience, not legal or tax advice. The regime, the available deductions, the rates of the region and comune, and the very fact of residency differ for everyone, so calculating exactly your case should be done by a licensed accountant (commercialista), and the figures - verify on the official portals.

Common myths about the ordinary regime

• "Forfettario is the tax system of Italy" - no, according to the community it is a preferential add-on, while the base is the ordinary regime with a progressive scale.
• "I fell into 35 percent - the whole income will be taxed at 35" - no, the brackets are calculated by parts, the top rate hits only the part of the income above the boundary.
• "The tax is only IRPEF" - according to the community on top go the regional and municipal addizionali, and for a business also IVA and contributions.
• "On the ordinary regime you cannot reduce anything" - on the contrary, ordinario gives access to deductions (detrazioni and deduzioni), which forfettario does not have.
• "Got a residence permit - became a tax resident" - according to the community these are different things; residency is determined by 183 days and the centre of interests.
• "I will not spend 183 days - no taxes" - a simplification: they look wider, and it is better to calculate this area in advance.

Related articles

• Taxes for the self-employed: forfettario and INPS - the preferential regime, rates, and contributions.
• Income tax return: 730 and Redditi PF, deadlines, penalties - how and when to report.
• Flat tax for wealthy new residents - the fixed tax on foreign income.
• Codice fiscale, SPID, and digital identity - the tax code and access to government services.
• ISEE and DSU on the INPS portal - where reddito complessivo comes in handy.
• Bank account and transferring money to Italy - accounts and the origin of funds.
• The 183-day rule and permesso renewal - worldwide income and residency.
• Tax deductions in Italy: 730, medical costs - detrazioni and deduzioni in detail.

Official sources

• agenziaentrate.gov.it - the Italian tax authority: rates and calculation of IRPEF, addizionali, IVA, return forms, F24, imposta sostitutiva.
• agenziaentrate.gov.it - IRPEF: rates and calculation - the official page with the current brackets and the income tax calculation procedure.
• normattiva.it - the official texts of Italian laws, including the TUIR (DPR 917/1986) - the consolidated law on income tax, and the new Testo unico D.Lgs. 117/2026, which applies from 01.01.2027 (arts. 376-377).
• inps.it - the National Social Security Institute: social contributions, which on the ordinary regime go on top of the income tax.
• interno.gov.it and portaleimmigrazione.it - the Italian Ministry of the Interior and the immigration portal: income and tax status requirements for residence permit renewal.

Frequently asked questions

How does the ordinary regime (ordinario) differ from forfettario?

According to the community, on forfettario the income is taxed at a single reduced rate (5 or 15 percent) on an imputed share of turnover, no IVA is charged, and reporting is minimal. On the ordinary regime (ordinario) the income goes by the progressive IRPEF scale (from 23 to 43 percent) plus regional and municipal surcharges, IVA appears, you can deduct real expenses, but the accounting is also costlier - usually you cannot manage without a commercialista. Which is more advantageous for you specifically is calculated before opening the activity, not after. This is not legal advice - check on agenziaentrate.gov.it.

How does the progressive IRPEF scale work?

According to the community, IRPEF takes not a single rate on the whole income but different rates on parts of the income within each band (brackets). The reference for the brackets cited in chats: roughly up to 28000 euro - 23 percent, from 28000 to 50000 - 35 percent, above 50000 - 43 percent. That is, with an income of 40000 the first 28000 is taxed at 23 percent, and only the remainder above that - at 35. Verify the exact boundaries and rates for your year on agenziaentrate.gov.it, they are time-sensitive - this is not legal advice.

What are addizionale regionale and comunale?

According to the community, these are the regional and municipal surcharges on IRPEF: in addition to the main state tax you also pay extra percentages to your region and municipality according to your tax residency. The basic regional rate is a little over a percent, but the region can raise it, and it comes out differently in different regions (somewhere one rate on all income, somewhere in brackets). Check the specific rates of your region and comune with an accountant and on agenziaentrate.gov.it - this is not legal advice.

Who falls under the ordinary regime rather than forfettario?

According to the community, in ordinario end up those for whom forfettario is unavailable or disadvantageous: those who exceeded the regime's turnover limit, those with an ATECO code that excludes the activity, employees (their taxes are withheld by the employer on the ordinary scale), as well as those with large real expenses for whom it is more advantageous to deduct them. Whether the preferential regime suits you is determined not by preference but by the structure of the income and the activity code - work through your case with a commercialista. This is not legal advice.

When do I become a tax resident of Italy?

According to the community, the classic marker is residing in Italy for more than 183 days a year, but the tax authority looks wider: the centre of life interests (family, housing, main activity) and the registration steps (registration, residenza). Becoming a resident for migration and becoming a tax resident are different things, and they are often confused. From the moment of tax residency Italy generally expects a return on worldwide income. This is an area where it is better to calculate and document the facts with an accountant - not legal advice.

What is imposta sostitutiva (the substitute tax)?

According to the community, this is a separate tax at a fixed rate instead of the ordinary IRPEF scale for certain types of income. For example, profit from the sale of real estate or from capital gains (including crypto) is often taxed at a single rate and is not added to the rest of the income on the progressive ladder. Forfettario itself is also a kind of substitute tax. Verify the applicability and rates for your case on agenziaentrate.gov.it and with a commercialista - this is not legal advice.

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Documents for this topic

• Certificate of Tax Residency in Italy (Attestato di Residenza Fiscale - Agenzia delle Entrate)
• Guide to Doing Business in Italy for Investors (ITA, 2018, in Russian)
• Document Checklist for Admission to Italian University (Master's, Non-EU Citizens)