How to read the busta paga
The Italian payslip starts from the monthly gross pay and first deducts the employee's INPS social security contributions. The result is the taxable income, on which the monthly IRPEF is calculated with the employee tax deductions. The remainder is the net in the payslip, what reaches the bank account.
The TFR, the deferred severance pay paid upon termination, does not appear as a deduction from net pay: it accrues month by month as a company cost of around 6.91% of annual pay. It is best to think of it separately from the payslip, because it is money the employee will receive when the employment relationship ends.
The INPS contribution in 2026: 9.19%
The employee contribution in the general regime is 9.19% of taxable pay, with a single rate for most salaries. The company pays the larger part: 23.81% for IVS (pension) plus 1.61% for NASpI (unemployment) and other minor contributions, so the employer's contribution cost is around 28-32% of gross pay.
Overall, the Italian tax wedge is one of the highest in Europe: out of every 100 euros of labour cost, the employee ends up taking home around 55-65 euros depending on salary and family situation.
IRPEF in the payslip: brackets and deductions
The 2026 IRPEF has three brackets: 23% up to 28,000 euros, 33% between 28,000 and 50,000, and 43% above. The payslip applies an annualised calculation: each month the proportional share of tax corresponding to the estimated annual taxable income is withheld, and the employee tax deductions adjust the amount downwards for middle and low incomes.
That deduction explains why two employees with the same gross pay have different net pay: it depends on annual taxable income and family responsibilities. With very low incomes the deduction cancels the tax (the no tax area is around 8,500 euros for employees) and up to 15,000 euros per year the trattamento integrativo of 1,200 euros is added, which is advanced month by month in the payslip.
Tredicesima and quattordicesima: how many payments there are
The tredicesima is mandatory: it is paid in December and equals a full monthly salary for each year worked, prorated by months. It is calculated on fixed and continuous pay, excluding overtime and occasional supplements, and the month counts if at least 15 days have been worked. With a monthly pay of 1,800 euros and a full year, the tredicesima is 1,800 euros gross; starting in April, 9/12.
The quattordicesima is not mandatory: it exists only if the collective agreement (CCNL) provides for it, usually in summer. It is included in the agreements for commerce, tourism or food; the metalworking one does not, and its workers receive only thirteen payments. Before budgeting, you must check the applicable CCNL and count the actual payments.
From gross to net with an example
With a gross annual salary (RAL) of 33,350 euros, the worker earns about 2,566 euros gross per month over 13 payments and takes home around 1,863 euros net. In the twelve ordinary monthly payments the net is somewhat higher, because the December tredicesima does not reduce the previous ones, but the annual total is what matters.
The practical rule for budgeting an Italian subsidiary: on top of the gross, the company adds around 30% in contributions and the TFR, so the total cost of the position is about 1.4-1.5 times the worker's net salary.
What to watch when hiring in Italy
The most delicate adjustment when hiring in Italy is communication: Italian candidates think in annual RAL and in the net of 13 or 14 payments, so offer in RAL and translate the monthly net according to the number of payments in the collective agreement to avoid misunderstandings.
Key points
- CCNL collective agreement: sets sector minimums and the number of payments (13 or 14)
- TFR: the 6.91% per year accumulates and is paid on termination, budget it as a cost
- Tax wedge: the worker's net is 55-65% of the total cost for the company
- Pay transparency: from June 2026 job offers must state salary ranges
