What is IRPEF?
IRPEF (Imposta sul Reddito delle Persone Fisiche) is Italy's personal income tax on individuals. It's the main income tax that most people working or earning in Italy will encounter. It's a progressive tax, meaning higher income is taxed at higher rates.
Current IRPEF Tax Brackets
IRPEF applies to taxable income at the following progressive rates:
| Income Band | Rate |
|---|---|
| Up to €28,000 | 23% |
| €28,001 to €50,000 | 35% |
| Over €50,000 | 43% |
On top of these national rates, Italian regions and municipalities add their own surcharges. Regional surcharges typically range from 1.23% to 3.33% depending on the region. Municipal surcharges add a further 0% to 0.9% on top of that. So the effective maximum marginal rate including surcharges can reach 47%+.
Who Pays IRPEF
Italian tax residents pay IRPEF on their worldwide income — income from Italian sources and income from abroad. This is the most significant difference from non-residents.
Non-residents pay IRPEF only on Italian-source income: income from work performed in Italy, Italian property income, Italian business income, and dividends or interest from Italian companies or accounts.
Whether you're a resident or non-resident is determined by your residenza fiscale status — not simply by where you hold a passport or bank account.
How IRPEF Is Collected
Employees: IRPEF is withheld at source by your employer each month (ritenuta d'acconto). At year-end, you file a return (or it's settled via your employer if you use the Modello 730) and any balance owed or refund due is calculated.
Self-employed and freelancers: Estimated tax is paid in advance installments (acconto) in June and November based on the prior year's liability. The final balance is paid when filing the Modello Redditi PF annual return, using a Modello F24 payment form.
Landlords: Rental income is generally taxed as IRPEF, though landlords can opt for the cedolare secca flat tax as an alternative.
Reducing Your IRPEF Bill
IRPEF is calculated on gross income, then reduced by deductions and credits:
Deductions (deduzioni) — reduce your taxable income before rates apply. Examples: INPS contributions, supplementary pension contributions, certain disability-related expenses.
Credits (detrazioni) — reduce the final tax amount directly. These include the work income credit (detrazione da lavoro dipendente), credits for dependent family members (children, spouses, parents), medical expense credits (19% of qualifying costs), education, mortgage interest, and renovation bonus credits.
The detrazione fiscale and deduzione fiscale entries explain these in more detail.
When IRPEF Doesn't Apply
Some income types in Italy are taxed by separate flat-rate regimes rather than IRPEF. The cedolare secca (residential rental income), the regime forfettario flat-rate for small businesses, and the Impatriati workers' incentive all involve substitute taxes that replace IRPEF, often at lower rates.