January pay slips in Italy are now reflecting the introduction of new flat tax measures outlined in the 2026 Budget Law, impacting workers in the private sector. The changes, which took effect with the January 2026 payroll, introduce a 15% flat tax on overtime, night work, holiday work, and shift work, replacing the standard IRPEF and regional surcharges.
The Italian Revenue Agency has issued guidance for employers on implementing the new tax regime, including the relevant payment codes for the F24 form. The flat tax applies to increases and allowances paid to employees for work performed at night or in shifts, on public holidays, or during rest days, as defined by collective bargaining agreements. However, clarifications are still awaited regarding the application of the new rules to broader wage increases resulting from collective bargaining renewals.
Alongside the 15% rate for specific work conditions, a 5% flat tax is now in effect for wage increases stemming from collective bargaining agreements signed between January 1, 2024, and December 31, 2026. Employers must verify that employees meet the eligibility criteria before applying the flat tax, according to the Revenue Agency’s instructions.
The 2026 Budget Law also increased the flat tax threshold for new residents transferring their residency to Italy, raising the substitute tax on foreign income from €200,000 to €300,000. This measure, initially introduced in 2017, aims to attract high-net-worth individuals and investment to Italy.
The application of the 15% flat tax is temporary, valid for the year 2026, but also extends to payments made by January 12, 2027, relating to 2026 work. The tax does not apply to compensation that entirely or partially replaces regular wages. The flat tax is available to private sector employees, excluding those in specific activities outlined in paragraph 18 of the law.
