Personal income tax rates and calculation

Latest update: 23/01/2024

Personal income tax applies to an individual’s total income. Gross tax is calculated by applying the rates per bracket to total income, net of deductible expenses.

Residents

For residents, total income consists of all income, regardless of source. Certain expenses (oneri deducibili – ‘deductible expenses’) may reduce total income, such as social security and welfare contributions or donations to non profit organisations.

Gross tax is calculated by applying the rates per bracket to total income, net of deductible expenses.

The personal income tax payable by the taxpayer is calculated by subtracting the deductions provided for by law from the gross tax: for example, deductions for spouses, children (aged 21 and over) and other dependent family members and deductions for certain types of expenses incurred during the year (such as health and education expenses, interest on mortgage loans, etc.) Any tax credits due should also be deducted.

Deductions are generally applied up to the amount of the tax due. Amounts exceeding the tax due cannot be reimbursed.

Non residents

For non residents, total income consists only of income earned in Italy.

Non residents may only deduct certain deductible expenses from their total income, such as donations (a full list can be found under Article 24, paragraph 2(IT) of the Consolidated Income Tax Act).

As for residents, gross tax is calculated by applying the rates per bracket to their total income, net of deductible expenses. Non residents may make certain deductions, such as deductions for employed work, deductions for expenses relating to building renovations or deductions for certain types of donations (a full list can be found under Article 24, paragraph 3(IT) of the Consolidated Income Tax Act), from gross tax. Deductions cannot be made for family responsibilities.

Individuals subject to the ‘Schumacher’ ruling

Individuals subject to what is known as the ‘Schumacher’ ruling, namely individuals who do not reside in Italy but meet the following conditions, are entitled to make any and all deductions:

• the income earned in Italy is equal to at least 75% of the total income earned;
• the individual does not receive similar tax benefits in the country of residence.

For further information on the application of personal income tax to individuals subject to the ‘Schumacher’ ruling, please see the Decree of the Ministry of Economy and Finance of 21 September 2015(IT).

Legislation and practice

• Consolidated Income Tax Act – TUIR
• Legislative Decree No. 216/2023
• Budget Law 2022
• Circular No 4 of 2022