The IRPEF is the Italian tax on personal income. The IRPEF is a progressive tax.
It applies to individuals who are resident in Italy and/or who earn income in Italy (possibly subject to the 183-day rule). Individuals residing in Italy must declare all income to IRPEF, while non-residents are taxed only on income earned in Italy. IRPEF is calculated on income from real estate, employment (dependent and independent), business activities, capital/investment income, and other income sources. IRPEF is often (mistakenly) equated with payroll withholding tax, even though withholding is only one component. The law provides a number of deductions and tax credits that reduce the taxable base or the net tax, as explained below.
IRPEF is usually withheld via payroll for employees and then summarized in the income tax return ("redditi", Form 730, or RED for pensioners). The tax balance with the "redditi" return is normally paid in June of the following year, along with the first instalment. The second instalment is due on November 30. Payments are made using Form F24. If the tax return generates an IRPEF credit, it can be offset against other taxes via F24. When using Form 730 (for employees), credit or debit is normally adjusted in payroll between July and September.
The reduction to 3 brackets initially planned only for 2024 was confirmed as a structural measure in the 2025 Budget Law (Law No. 207 of December 30, 2024, published on December 31, 2024).
Therefore, for the 2025 tax year and beyond, the following brackets and progressive rates apply:
| Income Bracket | Tax Rate |
|---|---|
| up to €28,000 | 23% |
| over €28,000 up to €50,000 | 35% |
| over €50,000 | 43% |
The adjustment provides slight relief for middle incomes, while incomes up to €12,000 are effectively tax-exempt. For incomes over €50,000, the rate remains unchanged.
Additionally, for employment income up to €40,000, deductions have been slightly increased. The structural increase from €1,880 to €1,955 applies to incomes up to €15,000.
The “Trattamento Integrativo” for incomes up to €15,000, originally limited to 2024, has also been made structural and applies in 2025.
Until 2022, rates were: up to €15,000: 23%; €15,001–28,000: 27%; €28,001–55,000: 38%; €55,001–75,000: 41%; over €75,000: 43%.
From January 1, 2022, rates were reduced from five to four brackets as follows:
Therefore, for 2023 the rates were: up to €15,000: 23%; €15,001–28,000: 25%; €28,001–50,000: 35%; over €50,001: 43%.
With Decree-Law No. 216 of December 30, 2023, progressive rates were restructured from 2024 by reducing brackets from four to three.
From January 1, 2024, the following IRPEF rates apply:
Summary table of 2024 brackets and rates:
| Income | IRPEF Rate 2024 |
|---|---|
| < €28,000 | 23% |
| €28,001–50,000 | 35% |
| > €50,001 | 43% |
The 2024 reform provided benefits ranging from €20 to €260 for incomes between €15,000 and €28,000. For incomes above €28,000, a steady €260 benefit was granted, while higher earners with eligible 19% deductions also benefited by €260 (excluding medical expenses).
To compensate for the non-confirmation of the partial social security contribution waiver in 2025, two measures have been introduced for employees. These apply only to employment income.
This measure applies to employees with total taxable employment income (RLD) not exceeding €20,000. Exempt income for “impatriati” is included, but not the primary home’s value.
The amount is calculated as a percentage of taxable employment income:
| Annual RLD | % somma integrativa |
|---|---|
| RLD < €8,500 | 7.1% |
| €8,500 < RLD < €15,000 | 5.3% |
| €15,000 < RLD < €20,000 | 4.8% |
This amount is automatically granted in each payroll period, affecting only net pay, and generates a tax credit for the employer via F24. If unjustified, it is checked at the year-end; if over €60, repayment is spread over 10 installments.
This applies to employees with total income (RC) over €20,000 and up to €40,000.
The deduction is €1,000 annually, reducing from €32,000 until it phases out at €40,000:
| Annual RC | Annual Deduction |
|---|---|
| €20,000 < RC < €32,000 | €1,000 |
| €32,000 < RC < €40,000 | €1,000 × (40,000 – RC)/8,000 |
| RC > €40,000 | 0 |
It is applied through payroll. If tax withheld is insufficient, no credit arises. Year-end checks apply; overages above €60 are recovered in 10 installments.
For taxpayers with total income above €75,000, from 2025 limits apply to deductions for qualifying expenses. The maximum deductible amount is based on an income-based base multiplied by a coefficient tied to dependent children.
Income brackets & base amounts:
Example calculations:
These limits apply to expenses from 2025. Medical expenses are excluded, as are interest on mortgages/insurance contracts entered into by December 31, 2024, and investments in innovative startups and SMEs. For multi-year expenses (e.g., renovations), annual installments count toward limits, excluding those incurred up to December 31, 2024.
See our news “Tax Incentives 2025” for more: https://www.graber-partner.com/de/gutachten-rundschreiben/1314-steuerverguenstigungen-1314.html
Deductions for dependents also change from 2025.
Age limits have been defined. The child deduction (up to €950/year) is granted only for children aged between 21 and under 30. Income threshold for dependent status (not exceeding €2,840.51/year, or €4,000 up to age 24) remains. The age limit doesn’t apply for children with disabilities—they remain eligible beyond age 30. Calculation formula unchanged.
Child deductions for under-18s are no longer claimed via payroll but through the unified family allowance (assegno unico) paid by INPS, based on the ISEE means test.
The scope of other dependents has been narrowed. From 2025, deductions are allowed only for ascendants (parents, grandparents, great-grandparents) living with the taxpayer. Until 2024, deductions (up to €750) were also allowed for others under Civil Code art. 433 living with, or maintained by, the taxpayer. Income-based scale remains.
From 2025, fringe benefit valuation rules for mixed-use company cars change. For vehicles registered and assigned from January 1, 2025, taxable value is 50% based on a notional annual mileage of 15,000 km using ACI rates, net of employee contributions.
The rate is 10% for electric vehicles and 20% for plug-in hybrids. For vehicles registered between July 1, 2020, and December 31, 2024, previous percentage rules (25%, 30%, 50%, 60% depending on CO₂) continue. Pre‑July 2020 vehicles use the earlier 30%.
| Fuel Type | % Tax Base |
|---|---|
| Electric | 10 % |
| Plug-in Hybrid | 20 % |
| Combustion | 50 % |
From the 2025 tax year, detailed reimbursements for meals, lodging, travel, and non-scheduled public transport (taxi, hired cars) are tax-free/deductible only if paid via traceable methods (bank transfer, card, or cheque). Cash reimbursements will be taxable and contributory. Exceptions apply for public line-transport commuters, where cash reimbursement remains exempt.
For bonuses paid in 2025, 2026, and 2027, the substitute tax rate of 5% is confirmed (replacing the original 10%). Eligible are variable bonuses tied to productivity, profitability, quality, efficiency, innovation, and profit-sharing under collective or company agreements. The annual maximum remains €3,000 and previous-year employment income cap is €80,000.
Departing from the standard €258.23 exemption, for 2025–2027 the exemption increases to €1,000. This applies to fringe in kind, domestic utilities, rent of primary residence, and mortgage interest. It increases to €2,000 for employees with declared dependent children (if CPF provided to employer).
From January 1 to September 30, 2025, a special non-taxable supplement equal to 15% of gross pay for night work and holiday overtime is confirmed for hospitality, tourism, and spa sectors. This measure, previously in place, is granted upon employee request and self-certification of under €40,000 employment income in 2024. The employer offsets the credit via F24.
Changes to tipping taxation in hotels and catering: while the 5% substitute tax remains, from 2025 the taxable cap rises from 25% to 30% of annual employment income. The prior-year income cap for eligibility increases from €50,000 to €75,000. Customer tips are treated as employment income and, unless explicitly waived, are taxed at 5% up to 30% of income. They are exempt from INPS/INAIL, excluded from TFR calculation, and count for deductions and benefits eligibility.
IRPEF is also subject to regional and municipal surcharges. Key rules:
Tax residence: The residence as of January 1 determines regional/municipal surcharge. Moves during the year take effect the following year.
Municipality change: Under art. 58 DPR 600/1973, a municipality change takes effect 60 days after request.
Regional surcharge: Regions may levy an additional IRPEF surcharge; collected in 11 instalments via payroll after settlement, with full deduction in final payroll if employment ends mid-year.
Municipal surcharge: Municipalities may apply up to 0.8% of taxable income (Rome has special rules). Highlights:
Contact us for a free initial consultation or email us with your details and request. Tel. +39 0474 572900 or info@graber-partner.com.
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