Italy has enacted a consolidated Income Tax Code that brings existing income tax legislation into a single legal text, reorganising the rules and repealing obsolete provisions ahead of its entry into force on 1 January 2027.
Italy has published Legislative Decree No. 117 of 19 June 2026 in the Official Gazette, introducing a new consolidated Income Tax Code (Testo Unico delle disposizioni legislative in materia di imposte sui redditi) that will apply from 1 January 2027.
The decree is part of the country’s wider tax reform programme under Law No. 111/2023. Instead of creating new income tax rules, it reorganises existing legislation into one legal code and removes provisions that are outdated or no longer compatible.
The new code contains 377 articles divided into three parts. It replaces the current framework based on the Income Tax Code (Testo Unico delle Imposte sui Redditi – TUIR) and various later legislative acts, making the legislation easier to navigate.
Main tax rules remain the same
The decree keeps the existing principles for income taxation.
Italian residents will continue to be taxed on their worldwide income, while non-residents will remain taxable only on income sourced in Italy. Residency rules are unchanged and continue to rely on residence, domicile or physical presence for most of the tax year.
The code also retains the six existing income categories:
- Real estate income
- Capital income
- Employment income
- Self-employment income
- Business income
- Other income
Partnership income will continue to be taxed on a transparent basis, with income allocated directly to partners according to their ownership interests.
Calculation of taxable income
The rules for calculating taxable income remain largely unchanged.
Taxable income continues to be determined by combining income from the different categories and deducting allowable losses where permitted. Income that is exempt or subject to final withholding tax or substitute tax remains outside the tax base.
The code also keeps the current rules for foreign currency conversions and the use of market value when property or other assets are transferred.
Deductions and tax credits retained
The consolidated code preserves existing deductions for:
- Mandatory social security contributions
- Certain medical expenses
- Pension contributions
- Contributions to approved healthcare funds
- Certain charitable donations
- Alimony payments, excluding child support
It also continues the current tax credits for family dependents, employment income, pension income and qualifying expenses such as mortgage interest, healthcare and education costs.
IRPEF rates confirmed
The decree confirms the existing three-rate IRPEF structure:
- 23% on income up to EUR 28,000
- 33% on income from EUR 28,001 to EUR 50,000
- 43% on income above EUR 50,000
