Moving from the US to Italy under the flat tax
Italy's flat tax was raised to EUR 300,000 per year by the 2026 Budget Law of 30 December 2025 — up from EUR 200,000, with family members now EUR 50,000 each. For a US citizen, that charge sits alongside continuing US federal liability rather than instead of it.
Two systems, both live
The Italian flat tax substitutes for Italian tax on foreign income. US citizenship-based taxation is unaffected by it. Whether the EUR 300,000 generates usable foreign tax credits against US liability is the central technical question in this corridor and it deserves specialist modelling, not a rule of thumb.
Anyone who relocated before the increase is grandfathered at their previous rate. If you are considering this, the date of relocation is a pricing decision.
If the flat tax does not apply
Italian-source income needs ordinary income-tax analysis, with the actual regional and municipal charges. A combined percentage should not be inferred from a representative location or a USD income point.
Capital gains and dividends are a flat 26%. IVIE at 1.06% applies to foreign real estate and IVAFE at 0.2% to foreign financial assets — a US portfolio held personally is squarely in scope.
Before you move
- The EUR 100,000 and EUR 200,000 flat-tax figures still circulating are both wrong for a 2026 arrival.
- Italian residence triggers on any of four tests: 183 days, habitual residence, domicile, or Anagrafe enrollment.
- The Impatriati regime is a separate lever for employment income: 50% exempt, 60% with a minor child, capped at EUR 600,000, for 5 years.
Continue your research
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Tax rates are only the first screen. Residency, ownership, treaty position and succession can change the outcome.
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