If you live and work in Italy, your paycheck might be about to get a little friendlier. Starting in 2026, the Italian government is rolling out a major reform of the IRPEF, Italy’s personal income tax. Here’s what foreign residents should know.
What’s Changing?
The government aims to reduce taxes across the board, focusing especially on low and middle income earners.
For employees:
- people earning up to €15,000 could see their taxes drop by about 7%;
- those earning around €35,000 may enjoy a 4% reduction;
- high earners (over €120,000) will see smaller cuts, often under 1%.
Pensioners and self-employed people benefit differently: the biggest gains go to middle-high income brackets rather than the lowest incomes.
How Does It Come the €35 of Earning That Makes Everyone Angry
Many headlines have sparked confusion, claiming that the IRPEF reform will give workers a measly €35 per month. The reality is more nuanced.
That small amount only applies to upper-middle-income employees, roughly earning around €40,000–€50,000 per year, where the tax reduction is minimal, around 1% of income.
For low and middle income workers the benefits are much larger. Someone earning €15,000 could save over €1,000 per year (about €87 per month), and someone at €35,000 could save around €1,400 annually (over €115 per month).
The frustration stems from cliff effects: small differences in income can dramatically change the amount of tax relief, making it feel unfair, especially for those just below a bracket threshold. Understanding these numbers helps cut through the hype and shows that while €35/month might be frustrating for some, the reform is far more generous for the majority of employees.
Why It Matters to You as a Expat
If you are a foreign resident working in Italy, these changes could affect your net income directly. As it is written above, some cuts are not evenly distributed. Someone earning €39,500 may see a smaller benefit than someone earning €40,000 due to how brackets are adjusted. Planning your income, deductions, or freelance invoicing could help you optimize your tax savings.
Remember to:
- Check your residency status. Only tax residents in Italy (those living more than 183 days a year in Italy) fully benefit from these cuts.
- Review deductions. The reform also changes work-related deductions and “bonus” mechanisms. Make sure your accountant or tax advisor is aware of the new rules.
- Stay informed about self-employment rules, If you run a business or freelance, the cut may hit different brackets, so early planning is key.
For foreign workers in Italy, the new IRPEF cuts are mostly good news: lower taxes on low and medium incomes, more take-home pay, and a simplified bracket system. But understanding how it interacts with your specific income type is essential to make the most of it.
