IRPEF (Imposta sul Reddito delle Persone Fisiche) is Italy's progressive personal income tax and the single largest tax most Italian residents will pay. Whether you are an employee, a freelancer under the standard regime, a retiree, or earn income from rental properties, IRPEF is likely the foundation of your tax obligations. Understanding how the brackets work, what deductions and credits are available, and how to minimise your liability legally is essential financial literacy for anyone living and working in Italy.
The IRPEF Brackets for 2026
Following the 2024 reform that reduced the number of brackets from four to three (consolidating the previous 25% bracket into the 23% bracket), the 2026 IRPEF structure is:
- Up to €28,000: 23%
- €28,001 to €50,000: 35%
- Above €50,000: 43%
These are marginal rates, meaning only the income within each bracket is taxed at that rate. An employee earning €40,000 gross would pay: 23% on the first €28,000 (€6,440) plus 35% on the remaining €12,000 (€4,200), for a total IRPEF of €10,640 before deductions and credits.
On top of national IRPEF, you also pay addizionale regionale (regional surcharge, typically 1.23% to 3.33%) and addizionale comunale (municipal surcharge, typically 0% to 0.9%). These vary significantly depending on where you live — a resident of Lazio pays higher regional IRPEF than a resident of Lombardia for the same income. Use our salary calculator to see the combined impact for your specific location.
Key Deductions (Deduzioni) That Reduce Taxable Income
Before IRPEF rates are applied, certain deductions reduce your taxable base:
- INPS and social security contributions: All mandatory social security contributions are fully deductible from taxable income. For employees, this is automatically handled by the employer. For freelancers, you deduct the contributions you paid during the year. Our INPS calculator shows exactly how much you pay.
- Supplementary pension contributions: Contributions to approved pension funds (fondi pensione) are deductible up to €5,164.57 per year.
- Main residence (prima casa): The cadastral income (rendita catastale) of your primary residence is excluded from IRPEF if you live there.
Key Tax Credits (Detrazioni) That Reduce Your Tax Bill
After calculating IRPEF on your taxable income, various credits reduce the actual tax you owe:
- Employment income credit (detrazione per lavoro dipendente): A credit of up to €1,955 for employees earning up to €15,000, declining progressively for higher incomes. This significantly reduces the effective tax rate for lower earners.
- Self-employment income credit: A similar but smaller credit for freelancers and self-employed individuals under the standard IRPEF regime.
- Family member credits (detrazioni per carichi di famiglia): Credits for dependent spouses and children. The system changed significantly in 2022 with the introduction of the Assegno Unico for children, but credits for dependent spouses and other family members remain. See our family deductions calculator.
- Medical expenses: 19% tax credit on medical expenses exceeding the €129.11 threshold.
- Education costs: 19% credit on school and university tuition fees (with caps).
- Mortgage interest: 19% credit on mortgage interest for your primary residence, up to €4,000 per year in interest.
- Renovation and energy efficiency bonuses: Credits of 36% to 65% (or higher under certain bonus schemes) for qualifying property renovation and energy improvement expenses.
Effective Tax Rates: What You Actually Pay
Due to the interaction between brackets, deductions, and credits, the effective tax rate (the percentage of your gross income you actually pay in IRPEF) is often significantly lower than the marginal rate. Typical effective rates for employees in 2026:
- €20,000 gross income: approximately 14-16% effective rate
- €30,000 gross income: approximately 19-22% effective rate
- €50,000 gross income: approximately 26-29% effective rate
- €80,000 gross income: approximately 33-36% effective rate
These figures include IRPEF plus regional and municipal surcharges but exclude INPS contributions. For the complete picture of your take-home pay, use our salary calculator, which factors in all taxes, contributions, and credits.
IRPEF for Self-Employed and Freelancers
If you are a freelancer or self-employed under the standard regime (not Regime Forfettario), you pay IRPEF on your net profit — revenue minus allowable business expenses. This means you can deduct actual costs such as office rent, equipment, professional development, travel, and professional insurance.
The advantage over the Regime Forfettario is that if your actual expenses are high, your taxable base drops significantly. The disadvantage is that marginal rates can reach 43%, and you lose the simplicity of the forfettario system. Compare both options with our Regime Forfettario calculator and self-employed tax calculator.
Key Takeaways
- IRPEF has three brackets in 2026: 23% (up to €28,000), 35% (€28,001-€50,000), and 43% (above €50,000).
- Regional and municipal surcharges add 1.2% to 4.2% on top of national IRPEF.
- Deductions (INPS, pension contributions) reduce your taxable income before rates are applied.
- Tax credits (employment, family, medical, renovation) directly reduce your tax bill after calculation.
- Effective rates are significantly lower than marginal rates due to the progressive structure and available credits.