How IRPEF works
IRPEF taxes the income of natural persons: salaries, self-employment income, property income, dividends and capital gains. Residents are taxed on their worldwide income; non-residents only on Italian-source income, for example a salary for working in Italy or a property there.
From the reddito complessivo (the sum of all income), the allowed deductions are subtracted and the bracket scale is applied. Then the detrazioni are subtracted, which work like Spanish tax credits.
Brackets in force in 2026
The middle bracket fell by two points in 2026, the first cut in the tax in a decade. The regional and municipal surcharges are then added to the result, so the effective rate is always somewhat higher than the table rate.
Key points
- - Up to 28,000 euros: 23%
- - From 28,000.01 to 50,000 euros: 33% (previously 35%)
- - Over 50,000 euros: 43%
Deductions and no tax area
The employee deduction means that low incomes pay no tax: in practice, an employee does not pay tax below around 8,500 euros per year in 2026, which is known as the no tax area. The deduction decreases as income rises and disappears at around 50,000 euros.
For very low incomes there is also the trattamento integrativo, a supplement of 1,200 euros per year that the employer advances in the payroll to those earning less than 15,000 euros and gradually fades from there.
Regional and municipal surcharges
Italy adds two surcharges to IRPEF that do not exist in Spain: the addizionale regionale, which ranges from around 1.2% to 3.3% depending on the region, and the addizionale comunale, of up to 0.8% depending on the municipality. Both are applied to the taxable base and collected through the same channel as the tax.
For an employee, the company already withholds them in the payroll along with IRPEF. If you change residence to another region or municipality, the surcharges adjust automatically from the following tax year.
Self-employed: the forfettario regime
Italian self-employed workers pay personal income tax under the general scale, but there is a tax shortcut: the forfettario regime, with a flat rate of 15% on a reduced base and 5% during the first five years of activity. It can be used as long as turnover does not exceed 85,000 euros per year.
Forfettario also simplifies accounting and VAT: no value added tax is charged to the client and few obligations are settled per year. It is the usual route for a Spanish freelancer setting up their activity in Italy before making the leap to an SRL.
SRL partners, dividends and non-residents
Dividends distributed by your SRL are taxed in the partner's hands at a single rate of 26%, within capital income. It is a different scheme from the Spanish one: there are no brackets, it is withheld at source and settled in the tax return.
If you are a tax resident in Spain, the double taxation treaty between the two countries limits the Italian withholding and you can offset what you have already paid in your personal income tax. Italian brackets only apply to those resident in Italy, just as happens with the French impôt sur le revenu.
