Italy’s freshly enacted 2026 Budget Law contains several provisions that directly affect expatriate compensation planning and the cost of deploying talent into the country. According to KPMG’s Global Mobility Services Flash Alert, the flagship change is a steep rise in the so-called “new residents” flat tax to €300,000 per year (plus €50,000 per dependent), up from €200,000. The increase applies to individuals who register as Italian tax resident on or after 1 January 2026. (kpmg.com)
Other mobility-relevant measures include a cut in the second personal-income-tax bracket to 33 %, a higher non-taxable meal-voucher ceiling (€10), and tighter eligibility rules for the popular impatriati regime. Social-security thresholds have also been adjusted: the 1 % additional contribution now kicks in at €56,224 and the annual earnings cap moves to €122,295.
![Italy’s 2026 Budget Law Raises Flat-Tax Regime and Tweaks Mobility Incentives]()
HR professionals and assignees tackling these changes must also keep immigration formalities on track. VisaHQ’s Italy portal (https://www.visahq.com/italy/) offers a quick, guided way to obtain work permits, residence visas and other documents, with real-time tracking and expert assistance—helping organisations align compliant entry clearance with their updated tax and payroll strategies.
Why it matters: the flat-tax regime has been a magnet for high-net-worth individuals (HNWI) and senior executives since 2017 because it substitutes Italian tax on worldwide income with a lump sum. Raising the price tag may deter mid-level assignees but could still appeal to ultra-wealthy transferees. Employers must revisit cost projections, gross-up arrangements, and balance-sheet calculations for packages commencing next year.
Action points for HR: Map impacted assignees by residency start date; update tax-equalisation models; and brief candidates on choosing between the revamped flat tax and the impatriati regime, which remains attractive for payroll-based employees earning under €600,000.
Other mobility-relevant measures include a cut in the second personal-income-tax bracket to 33 %, a higher non-taxable meal-voucher ceiling (€10), and tighter eligibility rules for the popular impatriati regime. Social-security thresholds have also been adjusted: the 1 % additional contribution now kicks in at €56,224 and the annual earnings cap moves to €122,295.
HR professionals and assignees tackling these changes must also keep immigration formalities on track. VisaHQ’s Italy portal (https://www.visahq.com/italy/) offers a quick, guided way to obtain work permits, residence visas and other documents, with real-time tracking and expert assistance—helping organisations align compliant entry clearance with their updated tax and payroll strategies.
Why it matters: the flat-tax regime has been a magnet for high-net-worth individuals (HNWI) and senior executives since 2017 because it substitutes Italian tax on worldwide income with a lump sum. Raising the price tag may deter mid-level assignees but could still appeal to ultra-wealthy transferees. Employers must revisit cost projections, gross-up arrangements, and balance-sheet calculations for packages commencing next year.
Action points for HR: Map impacted assignees by residency start date; update tax-equalisation models; and brief candidates on choosing between the revamped flat tax and the impatriati regime, which remains attractive for payroll-based employees earning under €600,000.
