Italy's €300K Flat Tax for Americans: Who It Actually Suits in 2026

Peter Tumbas · Berkshire Hathaway HomeServices New England Properties
August 2026

Every few months another headline resurfaces about Italy's flat tax for wealthy new residents. Most of them are two years out of date. The rate has changed twice since the regime launched, most recently in the 2026 Budget Law, and the number that made this programme famous in 2019 is no longer the number that applies to anyone electing it today.

What Changed in 2026

Italy's 2026 Budget Law (Legge di Bilancio 2026), signed December 30, 2025, made two changes to Article 24-bis of the Italian Consolidated Income Tax Code. The annual flat tax for individuals transferring Italian tax residence from 2026 onward rose from 200,000 EUR to 300,000 EUR per year. The surcharge for each additional qualifying family member rose from 25,000 EUR to 50,000 EUR per person per year.

This is the second increase in two years. The regime charged 100,000 EUR per year when it launched. The 2024 reform raised new applicants to 200,000 EUR. The 2026 reform raised new applicants again to 300,000 EUR. Each time, Italy confirmed grandfathering for people who had already transferred residency under the prior rate.

What Article 24-bis Actually Is

Article 24-bis lets an individual who transfers Italian tax residence pay one fixed annual charge covering all foreign-sourced income instead of Italy's ordinary progressive rates. It runs for fifteen years from election and can be revoked voluntarily at any time without penalty. Unlike the 7% programme, which is restricted to qualifying municipalities under 20,000 population in specific southern regions, Article 24-bis has no geographic constraint at all. It applies equally in Milan, Rome, Florence, Lake Como, Tuscany, or anywhere else in the country. This is the single biggest structural difference between Italy's two flat tax regimes, and the reason this one draws finance professionals and UHNW buyers toward major cities rather than small southern towns.

The Break-Even Math

The 300,000 EUR flat tax is a fixed charge. Ordinary Italian income tax is progressive, topping out at roughly 43% on income above approximately 50,000 EUR. Set 300,000 EUR equal to 43% of foreign income and the break-even lands at approximately 698,000 EUR in annual foreign-sourced income. Below that figure, an ordinary tax filing costs less than the flat tax. Above it, the flat tax becomes progressively more valuable the higher the income climbs, because the charge does not scale with earnings at all.

A taxpayer with 1.5 million EUR in annual foreign income who elects the regime pays 300,000 EUR flat, an effective rate of 20%, versus an effective rate approaching 40% under ordinary taxation on the same income. At 5 million EUR in annual foreign income, the effective rate under the flat tax falls to 6%. This is why the programme is correctly understood as a UHNW instrument, not a general relocation incentive.

Who This Regime Actually Suits

The realistic applicant profile: 1.5 million EUR or more in annual foreign-sourced income, a preference for a major Italian city or premium lakefront rather than a small southern town, and genuine long-term residency intent given the fifteen-year window. Finance professionals, fund principals, and family office principals evaluating Milan are the clearest fit, a pattern already covered in depth in Milan for American finance professionals. Lake Como buyers using this regime alongside a lakefront property purchase are the second most common profile; see the Lake Como region guide for the property side of that thesis.

A retiree living on Social Security and a modest IRA distribution, or a remote worker earning a US salary in the low six figures, gains nothing from this regime and should instead look at Italy's standard elective residency path, covered in the elective residency visa guide, or the 7% programme in Sicily and Calabria if a qualifying municipality fits their lifestyle.

Article 24-bis vs the 7% Programme

Qualifying Conditions

The regime is available to individuals who have not been Italian tax residents for at least nine of the ten tax years immediately preceding the election. There is no nationality restriction; Americans qualify on the same basis as anyone else. The individual must genuinely transfer Italian tax residence: register with the local anagrafe (population registry) and spend more than 183 days per year in Italy. The Agenzia delle Entrate has increased scrutiny of elections where physical presence in Italy is not clearly demonstrable, so this is not a paper-residency arrangement.

What the Flat Tax Covers, and What It Does Not

The 300,000 EUR charge covers foreign-sourced income broadly: Social Security, pension distributions, dividends, capital gains, foreign rental income, and most other income earned outside Italy. It does not cover Italian-sourced income, which remains subject to ordinary Italian taxation regardless of the election. A buyer who purchases an Italian property and earns Italian rental income from it will pay standard Italian rental tax on that income even while the 300,000 EUR flat tax covers everything else.

Additional Family Members

Qualifying family members can join the regime for 50,000 EUR per person per year under the 2026 rate structure, up from 25,000 EUR previously. A couple where both spouses have qualifying foreign income pays 350,000 EUR total (300,000 plus 50,000). For a family with combined foreign income of 2 million EUR or more, this remains highly competitive against ordinary taxation in most comparable jurisdictions. Grandfathering applies to the family surcharge too: those enrolled under the prior rate structure keep the 25,000 EUR per person rate for the remainder of their fifteen-year window.

The US Side of the Equation

The United States taxes its citizens on worldwide income regardless of foreign residency or foreign tax elections. Electing Article 24-bis does not reduce or eliminate US federal income tax obligations on the same income. The 300,000 EUR paid to Italy may support a Foreign Tax Credit claim on Form 1116, but the credit calculation is genuinely complicated here: US credit rules are built around income-proportional foreign tax, and Italy's charge is a fixed amount unrelated to the actual income level. FBAR reporting applies to qualifying Italian financial accounts. FATCA reporting applies to foreign financial assets above the applicable thresholds. Full detail on the ongoing compliance layer is in FBAR and FATCA for Americans owning property in Italy. A US tax attorney with international experience needs to model the combined US-Italy obligation before anyone elects this regime, not after.

Frequently Asked Questions

How much is Italy's flat tax for new residents in 2026?

300,000 EUR per year for anyone transferring Italian tax residence from 2026 onward, following the December 30, 2025 Budget Law. The family surcharge is 50,000 EUR per person. Grandfathering keeps prior residents at their entry rate: 100,000 EUR if before the 2024 reform, 200,000 EUR if between 2024 and the 2026 law.

At what income level does the flat tax actually save money?

Approximately 698,000 EUR in annual foreign-sourced income is the break-even against Italy's ordinary progressive rates. Below that, an ordinary tax filing costs less. The regime is built for income well above 1 million EUR per year.

Can Americans use both the 7% programme and the 300,000 EUR flat tax?

No. You elect one or the other. The 7% programme is restricted to qualifying small municipalities in specific southern regions. The 300,000 EUR flat tax has no geographic restriction and works anywhere in Italy, including Milan, Rome, and Lake Como.

Does moving to Italy under this regime eliminate US tax obligations?

No. The US taxes citizens on worldwide income regardless of Italian residency or tax elections. The Foreign Tax Credit may offset some US liability, but the calculation is complicated by the fixed-charge structure of the Italian tax. FBAR and FATCA obligations remain in full force.

Is grandfathering still available for the lower rates?

No. Grandfathering only protects people who had already transferred Italian tax residence before each increase. Anyone electing the regime for the first time now pays the current 300,000 EUR rate, regardless of how long they have been considering the move.