---
title: "Italy Tax and Payroll 2026 | IRPEF, INPS, Tredicesima"
description: "Italy payroll 2026: INPS employer contributions around 30%, employee 9.19%, IRPEF three bands up to 43%, and a mandatory 13th-month salary."
canonical: https://www.teamed.global/country-hiring-guides/italy/tax-and-payroll
---

Italy · Tax & payroll child

Served by Teamed vetted partner-entity network in Italy

# How does *Italy payroll tax* work in 2026?

Italy's 2026 Budget Law cut the second IRPEF band from 35% to 33% for income between €28,001 and €50,000. That rate cut changes the real cost of every mid-range hire. Add an employer INPS contribution that runs around 30%, plus a mandatory 13th-month salary, and Italy has one of the more demanding payroll stacks in Europe.

Last reviewed 12 June 2026 · Italy guide

![Aerial view of Rome's historic centre with terracotta rooftops and the Tiber River at dusk.](/images/country-guides/italy-tax-payroll.webp)

Illustration · Rome, Italy

Answer.cite this

Italian employers pay INPS social security contributions that average around 30% of gross salary. The exact rate depends on sector and company size. There is no separate pension scheme. Pension is built into INPS.

Employees pay INPS at 9.19% up to the annual ceiling of €122,295. Income tax (IRPEF) has three bands. The 2026 Budget Law reduced the middle band to 33%. The top rate above €50,001 stays at 43%.

Italy has no national minimum wage. Pay floors are set by sector-level collective agreements (CCNL). Most CCNLs require a 13th-month salary paid in December. Some require a 14th in summer.

Payroll runs monthly. IRPEF withheld must be remitted by the 16th of the following month via the F24 tax form. The employer acts as a withholding agent for both IRPEF and INPS.

![A vintage Italian adding machine on a marble desk with a view of terracotta rooftops.](/images/country-guides/italy-tax-payroll-polaroid-1.webp)

Counting in euros

## What does an employer pay in Italy INPS contributions?

Italian employers pay INPS contributions at approximately 30% of gross salary. The exact rate differs by sector and employee category.

There is no separate employer pension fund. Retirement provision sits inside INPS. The combined employer-plus-employee INPS rate runs around 40% for most private-sector workers.

| Contribution type | Who pays | Approximate rate | Notes |
| --- | --- | --- | --- |
| INPS (pension + welfare) | Employer | Around 30% | Varies 30-35% by sector and size |
| INPS (pension + welfare) | Employee | 9.19% | Up to annual ceiling |
| INAIL (workplace injury) | Employer | Industry-specific | Separate from INPS, set by sector risk class |

### Why rates vary

The INPS rate is not a single flat number. It depends on the applicable CCNL, the employee category (worker, employee, manager), and whether supplementary INPS funds apply. For a standard white-collar employee in private industry, the employer share runs around 30%. Manufacturing, retail, banking, and construction all have different ceilings and supplementary obligations.

### The INPS annual earnings ceiling

For workers enrolled after 1996 (the contributory pension system), INPS contributions are capped at an annual earnings ceiling of **€122,295** for 2026. Earnings above this ceiling are exempt from some INPS charges. This ceiling is the number that changes each year and directly affects the cost of senior hires.

### Tredicesima and its payroll cost

The tredicesima mensilita (13th-month salary) is a mandatory payment under virtually all Italian CCNLs. It is paid in December and equals one month of base salary. INPS contributions apply to it in the same way as to regular monthly pay. Some sectors, including commerce and banking, also mandate a 14th-month payment in June or July. Both instalments carry full INPS charges, so the true annual cost of an Italian hire is 13 or 14 months of gross salary plus employer INPS on each instalment.

## What does an employee pay in Italy INPS contributions?

Employees pay INPS at 9.19% of gross earnings up to the annual ceiling of €122,295.

Earnings above the ceiling are not subject to further INPS contributions. The employee rate is fixed and does not change by sector in the way the employer rate does.

| Earnings band | Employee INPS rate |
| --- | --- |
| Up to €122,295 per year | 9.19% |
| Above €122,295 per year | Reduced rate applies (some INPS charges cease) |

The employer calculates and withholds INPS from the employee's gross pay on each monthly payslip. The employee does not file separately for INPS. The full combined employer-plus-employee INPS amount is then remitted to INPS by the employer.

### No minimum wage anchor

Italy has no national statutory minimum wage. Pay floors are set by the applicable CCNL for each industry sector. This means the starting salary for a new hire depends on the sector, the employee level within the CCNL classification, and the geographic area. Employers must apply the correct CCNL or face back-pay claims. An EOR running Italian payroll knows which CCNL governs your hire before the offer letter is issued.

## Italy IRPEF income tax bands for 2026

IRPEF has three bands. Italy does not have a personal allowance. Tax starts from the first euro of income at 23%.

The 2026 Budget Law cut the second band from 35% to 33%. The top rate of 43% applies above €50,001.

Agenzia delle Entrate · IRPEF 2026

Italy applies IRPEF at three rates from the first euro of taxable income. No personal allowance exists. The 2026 Budget Law (Law No. 199/2025) reduced the second bracket from 35% to 33%. Tax credits (detrazioni) reduce the overall effective tax rate for low and middle earners but are not a zero-rate band.

Source: [Agenzia delle Entrate: Personal Income Tax Rates (IRPEF 2026)](https://www.agenziaentrate.gov.it/portale/web/english/personal-income-tax-rates-and-calculation)

| Income band (2026) | Rate | Band name |
| --- | --- | --- |
| €0 to €28,000 | 23% | First bracket (Primo scaglione) |
| €28,001 to €50,000 | 33% | Second bracket (reduced from 35% in 2026) |
| Above €50,001 | 43% | Third bracket (top rate) |

### Tax credits instead of a personal allowance

Italy replaces the concept of a tax-free personal allowance with a system of tax credits (detrazioni d'imposta). The main employment income credit tapers as income rises, meaning low earners see a lower effective rate than the 23% headline suggests. The credits are applied by the employer during payroll and reconciled in the employee's annual tax return (Modello 730). The employer calculates and withholds IRPEF on each payslip.

### Regional and municipal IRPEF top-ups

In addition to national IRPEF, employees pay a regional income tax (addizionale regionale) and a municipal charge (addizionale comunale). Regional rates vary by region from 1.23% upward. Municipal rates vary by local authority. Both are withheld through payroll. The total personal income tax burden for a high earner in a high-tax region can comfortably exceed 50% when these additional charges are included.

## How does Italian payroll filing work?

Italian employers act as withholding agents (sostituti d'imposta). They calculate and withhold IRPEF and INPS from each payslip.

Withheld IRPEF from one month must be remitted to the Agenzia delle Entrate by the 16th of the following month using the F24 payment form. INPS contributions follow the same monthly cycle.

The employer's core monthly payroll obligations in Italy:

- **Calculate gross pay**, including base salary, any variable pay, and the pro-rated tredicesima accrual
- **Deduct employee INPS** at 9.19% up to the annual ceiling
- **Deduct IRPEF** at the applicable bracket rates, less employment income credits
- **Calculate employer INPS** at the applicable sector rate (approximately 30% for most private-sector roles)
- **Issue the payslip** (busta paga or cedolino paga), showing all deductions. This is a legal requirement
- **Remit withheld IRPEF and INPS** via F24 by the 16th of the following month

### Annual obligations

At year-end the employer issues the **Certificazione Unica (CU)**, the Italian equivalent of a year-end income and tax summary. The CU must be issued to employees by 16 March after the tax year closes and filed electronically with the Agenzia delle Entrate. A late or missing CU triggers penalties. The employer also submits an annual INPS contribution declaration (modello UniEmens) each month, which cumulatively covers the full year.

### Italy's standard pay cycle: 13 months

Most Italian CCNLs define a 13-month pay year. The base salary is paid in 12 monthly instalments. The 13th instalment (tredicesima) is paid in December, typically at or before Christmas. Sectors including commerce and banking mandate a 14th instalment paid in summer. Payroll software must accrue these amounts monthly and provision them in advance. A tredicesima is not a discretionary bonus; it is a contractual entitlement under virtually every CCNL.

1. Identify the applicable CCNL Confirm which national collective bargaining agreement governs the hire before the first payslip runs. The CCNL determines pay floors, tredicesima obligations, and supplementary INPS fund enrolment.
2. Calculate gross pay and accruals Total base salary, variable pay, and the monthly tredicesima accrual. If the CCNL mandates a 14th instalment, accrue that too from month one.
3. Deduct employee INPS and IRPEF Apply INPS at 9.19% up to the annual ceiling, then apply IRPEF brackets and employment income credits to arrive at net take-home pay.
4. Calculate employer INPS and INAIL Apply the sector-specific employer INPS rate (around 30% for most private-sector roles) plus the INAIL accident insurance rate for the role's risk category.
5. Issue the busta paga Issue the monthly payslip to the employee. Italian law requires the payslip to show gross pay, all deductions, and net pay. Late or absent payslips expose the employer to penalties.
6. Remit via F24 by the 16th Pay withheld IRPEF and both employer and employee INPS to the tax authority via the F24 unified payment form by the 16th of the month following the pay period.

## Pension and social security contributions in Italy's payroll stack

Italy does not have a separate employer pension contribution scheme. Retirement saving is built into the INPS contribution that the employer already pays.

Around one-third of the INPS rate goes toward the national pension fund (Fondo Pensione). There is no additional pension enrolment step and no minimum employer pension contribution on top of INPS.

The INPS system covers pension, sick pay, maternity, paternity, redundancy (Cassa Integrazione), and other social welfare in a single contribution. Employers do not enrol employees in a separate pension scheme as they would in the UK. The pension element is automatic and bundled.

### Supplementary pension (Fondi Pensione Complementari)

Alongside INPS, Italy has a system of supplementary occupational pension funds (fondi pensione complementari) established by sector CCNLs. Employees can opt to direct part or all of their TFR accrual into the supplementary fund rather than leaving it with the employer. Employer contributions to supplementary funds vary by CCNL. If you are running an Italian hire through an EOR, the EOR manages the TFR routing decision and supplementary fund enrolment in compliance with the applicable CCNL.

### INPS earnings ceiling and its effect on pension accrual

For workers in the contributory pension system (registered with INPS after 1995), pension accrual is calculated on earnings up to the annual ceiling. The 2026 ceiling is €122,295. Earnings above this ceiling generate no additional state pension entitlement under the contributory formula. Senior executives earn well above this ceiling; their INPS pension entitlement tops out at the ceiling regardless of actual salary.

### TFR: the mandatory severance reserve

Italian employers must accrue TFR (Trattamento di Fine Rapporto) for every employee from day one. TFR accrues at annual gross salary divided by 13.5 per year of service. There is no cap on total accrual. For companies with more than 50 employees, TFR not directed to a supplementary fund must be paid into the INPS treasury fund (Fondo di Tesoreria), not held by the employer. TFR is paid out on termination regardless of the reason for leaving.

## How does Teamed handle Italy payroll for you?

Teamed becomes your legal [employer of record](/lp/employer-of-record) in Italy for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency.

IRPEF, INPS, tredicesima, TFR, and the full Italian CCNL stack run on **one platform**.

**Real HR and legal experts** handle your Italian hires, from identifying the right CCNL through every monthly F24 filing and year-end Certificazione Unica. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**. Employer cost **passes through at cost, itemised** on every invoice.

Italy's payroll stack includes INPS, IRPEF, regional and municipal levies, INAIL, tredicesima, TFR accrual, and supplementary fund routing. All of it runs on **one platform**. An Italian hire who converts from contractor to payroll keeps their record. That same employee can **graduate** from EOR to your own Italian entity without switching systems. Run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to see the full picture. EOR is the right model for a first Italian hire, **until it isn’t**. Start from the Italy hiring overview.

Key sources: [Agenzia delle Entrate: IRPEF rates](https://www.agenziaentrate.gov.it/portale/web/english/personal-income-tax-rates-and-calculation) and [INPS contribution rates](https://www.inps.it/it/en/inps-comunica/diritti-e-obblighi-in-materia-di-sicurezza-sociale-nell-unione-e/per-le-imprese/aliquote-contributive.html).

## Frequently asked questions

What social security rate does an Italian employer pay?

Italian employers pay INPS contributions at approximately 30% of gross salary for most standard private-sector roles. The exact rate varies by sector, CCNL, and employee category and can range from 30% to 35% or higher. There is no separate employer pension fund; pension provision is bundled within INPS. INAIL workplace accident insurance is charged separately at a sector-specific rate.

What INPS does an Italian employee pay?

Employees pay INPS at 9.19% of gross earnings up to the annual ceiling of €122,295 for 2026. Earnings above the ceiling are not subject to the same INPS charges. The employer withholds this amount from each monthly payslip and remits it to INPS together with the employer contribution.

What are the IRPEF income tax rates in Italy in 2026?

IRPEF has three bands from 2026. The first band taxes income from €0 to €28,000 at 23%. The second band, from €28,001 to €50,000, was reduced from 35% to 33% by the 2026 Budget Law. Income above €50,001 is taxed at 43%. Italy has no personal allowance; IRPEF applies from the first euro of income. Employment income tax credits reduce the effective rate for lower earners.

What is the tredicesima and does every Italian employee get one?

The tredicesima (13th-month salary) is a mandatory payment equal to one month of base salary, paid in December. It is required under virtually all Italian CCNLs and is not discretionary. INPS contributions apply to it in the same way as to regular monthly pay. Some sectors require a 14th-month payment in summer. Both instalments must be accrued in payroll each month.

How often does Italian payroll run and when is tax remitted?

Italian payroll runs monthly. The pay cycle is standard across most sectors, with 13 salary instalments per year including the tredicesima. IRPEF withheld from employees in one month must be remitted via the F24 payment form by the 16th of the following month. INPS contributions follow the same monthly remittance cycle.

Teamed Legal Operations

The biggest Italian payroll surprise for foreign employers is the true cost of the 13th month. You hire at an annual salary and forget that tredicesima is a 13th payment on top. Add INPS on that instalment and the real cost is materially higher than the headline number. Run the employer-cost calculator before you make an offer, not after.

A note from Tom Price-Daniel

Italy cut its middle IRPEF band to 33% in 2026. That rate applies on income between €28,001 and €50,000. Most mid-range Italian salaries land here.  
Add INPS at around 30%, a mandatory 13th-month salary, and TFR from day one. The real cost is not what the annual figure says.  
Get it right before you send the offer.

Tom Price-Daniel · Co-founder, Teamed

## Related Italy guides

- Hiring in Italy, overviewparent
- [Italy termination and severance](/country-hiring-guides/italy/termination-and-severance)sibling
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax, or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Agenzia delle Entrate and INPS for Italy, or speak to a qualified professional, before relying on any specific framework. Italian INPS rates vary by sector, CCNL, and company size. The employer rate shown is an approximation for standard private-sector employment. Italy has no national statutory minimum wage; pay floors are set by sector-level collective agreements. The 2026 IRPEF band changes (Law No. 199/2025) are subject to further regulatory guidance.