Italy Income Tax Rates 2026: Personal Tax, Capital Gains and Corporate Tax
Italy taxes individuals through progressive personal income tax (IRPEF), while companies generally pay corporate income tax (IRES) and, where applicable, regional tax on productive activities (IRAP). This guide explains the rates, residence tests, investment income and relevant legislation.
1. Personal income tax (IRPEF) rates for 2026
IRPEF (Imposta sul Reddito delle Persone Fisiche) is the national personal income tax on taxable individual income. The 2026 Budget Law (Law No. 199 of 30 December 2025, Article 1(3)) reduced the second bracket from 35% to 33% with effect from 1 January 2026.
| Annual taxable income (EUR) | Marginal IRPEF rate |
|---|---|
| Up to 28,000 | 23% |
| Over 28,000 to 50,000 | 33% |
| Over 50,000 | 43% |
These are marginal rates: each rate applies only to income within that band. National tax is calculated before relevant deductions and tax credits. Regional and municipal IRPEF surcharges may also apply, with rates depending on the taxpayer's location.
Legal basis: Article 11 of Presidential Decree No. 917/1986 (TUIR), as amended for 2026, and Law No. 199/2025 in the Official Gazette. The 2026 consolidated income-tax legislation should also be consulted for its applicable provisions and transitional rules.
Tax deductions and credits
The final IRPEF liability can be reduced by applicable deductions and credits for employment, pensions, qualifying family circumstances and specified expenses. Eligibility, income limits and restrictions differ by relief. A marginal rate is therefore not the same as the effective tax rate.
2. Tax residence and non-resident taxation
Under the Italian tax-residence rules applicable from 2024, an individual is generally tax resident if, for most of the tax year, any one of the following conditions is met:
- The person has their habitual residence in Italy.
- The person's domicile, meaning the principal location of personal and family relationships, is in Italy.
- The person is physically present in Italy, including fractions of days.
- The person is registered in the resident population register, subject to the possibility of proving that registration does not reflect actual residence.
For a calendar year, the relevant period is generally at least 183 days, or 184 in a leap year. Resident individuals are generally taxed on worldwide income, subject to relief and applicable tax treaties. Non-residents are generally taxable only on Italian-source income. The source rules are principally addressed by Article 23 of the TUIR; treaty provisions can change the outcome.
Official explanation: Agenzia delle Entrate - Residence for tax purposes.
3. Capital gains, dividends and interest
Italy generally applies a 26% substitute tax to many categories of financial investment income and gains realized by individuals outside a business, subject to statutory exceptions, specific regimes and treaty relief.
| Income or gain | General treatment |
|---|---|
| Dividends received by resident individuals outside a business | Generally 26% final withholding |
| Capital gains on shares and many financial instruments | Generally 26% substitute tax |
| Ordinary bank interest and many financial returns | Generally 26%, subject to exceptions |
| Qualifying Italian government securities and certain equivalent securities | Preferential 12.5% treatment may apply |
| Gains on real property | Separate rules apply; certain disposals may be taxable depending on holding period, use and statutory exceptions |
Legal framework includes Articles 44, 67 and 68 of the TUIR, Legislative Decree No. 461/1997 and subsequent amendments. Capital gains on company participations held by corporate taxpayers follow different rules, discussed below. Financial instruments, crypto-assets and cross-border investments can be subject to special rules, so the general 26% figure should not be applied automatically to every transaction.
See the Italian Chamber of Deputies' overview of individual taxation.
4. Corporate income tax (IRES)
IRES (Imposta sul Reddito delle Società) is the tax on taxable profits of companies and other specified entities. The standard rate is 24%. Article 73 of the TUIR identifies entities subject to IRES, while Article 77 establishes the standard rate. Specific entities and transactions can be subject to surcharges, incentives or special rules.
| Corporate category | General 2026 treatment |
|---|---|
| Ordinary companies | 24% standard IRES |
| Banks and certain financial entities | 24% standard IRES plus potentially applicable sector-specific surcharge |
| Non-operating companies | Special rules and additional tax may apply if statutory tests are met |
Qualifying corporate disposals of shares may benefit from the participation exemption (PEX), under Article 87 of the TUIR, generally exempting 95% of qualifying capital gains. Requirements and subsequent legislative changes must be assessed for the particular transaction.
Official overview: Invest in Italy - Taxation.
5. Regional tax on productive activities (IRAP)
IRAP (Imposta Regionale sulle Attività Produttive) is a regional tax based on the net value of production rather than simply corporate taxable income. Its principal legal basis is Legislative Decree No. 446/1997. The ordinary baseline is 3.9%, subject to regional variations and sector-specific rules.
| Activity | Reference IRAP rate |
|---|---|
| Ordinary commercial and manufacturing companies | 3.9% baseline, subject to regional adjustments |
| Banks and financial institutions | 4.65% baseline; generally 6.65% during 2026-2028 under temporary measures |
| Insurance companies | 5.9% baseline; generally 7.9% during 2026-2028 under temporary measures |
The 2026 Budget Law, Article 1(74)-(75), introduced temporary increases for relevant financial and insurance businesses. Other targeted IRAP measures may apply, including rules for the energy sector. Actual liability depends on the region, activity and taxable base. Refer to the Chamber of Deputies' regional taxation guide.
6. Italian income tax returns and filing
Individual taxpayers may use Modello 730 or Modello REDDITI Persone Fisiche, depending on their income and circumstances. Companies generally have separate corporate filing obligations. Returns filed during 2026 ordinarily report the 2025 tax year, so the 2026 IRPEF rates are not automatically the rates for those returns.
The Revenue Agency publishes current forms, instructions and electronic filing information. Consult its REDDITI Persone Fisiche information page and return selection guidance. Deadlines and filing requirements may vary by tax year and taxpayer.
7. Key legislation and official sources
- Legislative Decree No. 117/2026 - consolidated income-tax provisions.
- Law No. 199/2025 - 2026 Budget Law.
- Normattiva - official consolidated Italian legislation database.
- Agenzia delle Entrate - Italian Revenue Agency.
- Invest in Italy - business taxation.
This article provides general tax information, not a determination of liability. For cross-border income, treaty claims, sector surcharges, or significant investment disposals, check the legislation in force for the relevant tax year and obtain case-specific professional advice.