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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Australia VS COUNTRY B Italy

Side-by-side analysis of income tax, effective rates, and take-home pay for Australia and Italy in 2026.

Daniel · CountryTaxCalc Updated June 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
Australia and Italy have similar headline top income tax rates — 45% in Australia versus 43% in Italy — but the comparison looks very different once you include Italy's full tax burden. Australia taxes personal income progressively with no employee social security contributions (superannuation is a mandatory employer contribution, paid separately on top of salary at 11.5%). Italy adds 9.19% employee INPS contributions on top of its IRPEF income tax, plus regional income tax surcharges (0.9%–3.33%) and municipal surcharges (up to 0.9%) averaging approximately 1.5%–2% combined. More critically, Italy's 43% top IRPEF rate applies from just €50,000, while Australia's top rate (45%) only applies above AUD 190,000 (~€115,000). The large middle bracket in Australia — 32.5% on AUD 45,001–$135,000 — is significantly lower than Italy's 35%–43% on equivalent incomes. Australia is cheaper at every income level compared here, with the gap widening sharply above €60,000. Italy's impatriate regime (Regime degli Impatriati) provides a 50% income exemption for qualifying expat workers for 5 years — this partially but not fully closes the gap versus Australia's regular progressive rates.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.
🇦🇺
COUNTRY A
Australia
TAX RATE
45%
Top Tax Rate
FY2025-26: 0%/19%/32.5%/37%/45% + 2% Medicare Levy; no employee SS
🇮🇹
COUNTRY B
Italy
TAX RATE
43%
Top IRPEF Rate
IRPEF 23%/35%/43%; plus 9.19% employee SS and ~1.5% regional/municipal surcharges
TYPICAL ANNUAL DIFFERENCE
Moving from Italy → Australia at €90,000
€13,400
That's €1,117/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS INCOME
🇦🇺 AU TAX
🇮🇹 IT TAX
SAVINGS
10-YEAR
€30,000
€4,100
€8,200
€4,100 cheaper in AU
€41,000
€60,000
€14,900
€22,100
€7,200 cheaper in AU
€72,000
€90,000
€25,600
€39,000
€13,400 cheaper in AU
€134,000
€150,000
€51,800
€71,200
€19,400 cheaper in AU
€194,000
💡

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🇦🇺

Australia Pros & Cons

+ PROS
  • No employee social security: Australian superannuation is a mandatory employer contribution (11.5% of salary in FY2025-26) paid on top of gross salary — it does not reduce take-home pay unlike Italy's 9.19% employee SS
  • Low-to-mid income rates: 0% up to AUD 18,200, 19% to AUD 45,000, 32.5% to AUD 135,000 — Australia's mid-bracket is significantly lower than Italy's IRPEF at equivalent incomes
  • Top 45% rate only above AUD 190,000 (~€115,000): Italy's 43% top rate applies from just €50,000 — Australia protects far more income at lower rates
  • CGT 50% discount: capital gains on assets held 12+ months are 50% discounted — effective CGT rate for assets held 1+ year is half the marginal income tax rate (e.g. 22.5% at 45% marginal)
− CONS
  • Tax year is July–June (FY): Australia's financial year ends June 30 — for international comparisons, note that July 2026 rate changes can affect this page's figures. Rate update required after July 1
  • No special expat income tax regime: unlike Italy's Impatriate regime or the UK's remittance basis, Australia has no flat-rate expat incentive — all income is taxed at standard progressive rates
  • Medicare Levy 2%: applies on top of income tax from AUD 26,000 (threshold applies); adds to effective rate. Medicare Levy Surcharge (1%–1.5%) also applies if you earn above AUD 90,000 and don't have private health insurance
  • AUD exchange rate risk: Australian-based earners paid in AUD face exchange rate exposure versus EUR — relevant for international comparisons of take-home pay
🇮🇹

Italy Pros & Cons

+ PROS
  • Impatriate Regime (Regime degli Impatriati): qualifying expats working in Italy after 3+ years abroad receive a 50% exemption on taxable employment income for 5 years (capped at €600,000 gross). Effective IRPEF rate halved for qualifying workers
  • Regional variation: some Italian regions (e.g. Trentino-Alto Adige) have very low or zero regional income surcharges — choosing the right region reduces the total burden
  • No wealth tax on Italian assets (for residents): Italy's imposta patrimoniale was abolished in 2000; Italian residents face no annual net wealth tax on domestic assets (IVIE applies to foreign real estate only)
  • Comprehensive social benefits: Italy's high employee SS funds pensions, healthcare (SSN — universal), and unemployment. Healthcare is completely free at point of use — versus Australia's Medicare, which covers basics but requires gap payments
− CONS
  • 9.19% employee SS (INPS) on top of IRPEF: Italy's employee social contribution rate is one of the highest in Europe and applies across almost all employment income — combined with IRPEF, effective top rate exceeds 53%
  • 43% IRPEF from just €50,000: Italy's top bracket activates at an extremely low threshold — a €50,001 earner pays the same marginal rate as a €500,000 earner
  • Regional + municipal surcharges: 0.9%–3.33% regional IRPEF and up to 0.9% municipal IRPEF add on top of federal rates — effective additional burden of 1.5%–4%+ depending on where you live
  • Administrative complexity: Italian tax system (Modello 730, Modello Redditi) is notoriously complex; foreign residents face additional reporting obligations (IVIE, IVAFE, Quadro RW for foreign assets)
FAQ

Frequently Asked Questions

Is Australia or Italy cheaper for income taxes?

Australia is cheaper at every income level in this comparison. Italy's 43% IRPEF top rate starts at just €50,000, and Italy adds 9.19% employee social security contributions plus regional and municipal surcharges averaging 1.5%–2%. Australia's equivalent income bracket is taxed at 32.5% with no employee SS deduction. At €90,000, Australian residents save approximately €13,400/year compared to Italian residents on standard rates. Italy's Impatriate regime (50% income exemption for qualifying expats) can narrow this gap significantly but does not fully close it even at €90,000.

What is Italy's Impatriate Regime (Regime degli Impatriati) in 2026?

The Impatriate Regime is Italy's main expat tax incentive. As reformed in 2024: qualifying workers who relocate to Italy and have not been Italian tax resident for the previous 3+ years can exempt 50% of their Italian employment or self-employment income from IRPEF. Duration: 5 years (extendable by 3 more years in certain cases — buying a house in Italy or having children). Cap: €600,000 of gross income. The exemption halves the effective IRPEF rate — for example, at €100,000 gross: taxable base becomes €50,000, IRPEF ~€15,050 instead of ~€37,690. Note: employee SS (9.19%) still applies to the full gross salary. The regime is narrower than it appears — it applies to IRPEF only, not social contributions.

How does Australian superannuation compare to Italian social security?

Australia: Superannuation Guarantee (SG) — employers must contribute 11.5% of ordinary time earnings to a superannuation fund (rising to 12% in July 2025). This is paid on top of gross salary — it does not reduce employee take-home pay. Employees can make additional voluntary contributions (concessional or non-concessional). Withdrawals from super after age 60 are generally tax-free. Italy: INPS contributions — employees pay 9.19% on gross salary (varies slightly by category); employers pay ~23%+. This 9.19% reduces employee take-home pay directly. Italy's state pension (previdenza sociale) provides a contribution-linked pension on retirement. For comparison: an Australian earning AUD 100,000 receives full take-home without SS deduction and accumulates super separately. An Italian earning €100,000 loses €9,190 to INPS before receiving income.

What are Italy's income tax brackets for 2026?

Italy reformed its IRPEF to three brackets effective 2024 and continuing in 2026: 23% on income up to €28,000; 35% on €28,001–€50,000; 43% on income above €50,000. A no-tax area (detrazioni) exempts the first approximately €8,500 of employment income from tax (slightly different for pensioners and self-employed). Regional IRPEF surcharges: 0.9%–3.33% of federal IRPEF — charged by each region. Municipal IRPEF surcharges: up to 0.9%. The combined effective top marginal rate (43% IRPEF + 3.33% regional max + 0.9% municipal max) can reach approximately 47.2% before employee SS. Note: Italy previously had 4 brackets (23%/25%/35%/43%); the simplification to 3 brackets has benefited mid-range earners by combining the bottom two brackets at 23%.

How do capital gains taxes compare between Australia and Italy?

Australia: Capital gains are included in assessable income and taxed at marginal income tax rates. Discount CGT: gains on assets held 12+ months receive a 50% discount before adding to income. For a 45% top-rate taxpayer: effective CGT rate is 22.5% on discounted gains. Primary residence: exempt (main residence exemption). Investment property: partial exemption; gains after 12 months taxed at 22.5% (at top rate). Italy: Capital gains on listed shares, funds, and ETFs: 26% flat rate (imposta sostitutiva). Property gains: exempt if primary residence; other property gains taxed at 26% or included in IRPEF (payer's choice). The Impatriate regime can partially shelter capital gains on Italian-source income during the 5-year period. For equity investors: Italy's flat 26% CGT is simple and competitive; Australia's 22.5% (after discount) is slightly lower for top-rate taxpayers holding assets 12+ months.

Is there a digital nomad visa or special visa for Australia or Italy?

Italy: Since 2022, Italy offers a Digital Nomad Visa (visto per nomadi digitali) for non-EU nationals who can prove remote work income of at least €28,000/year from non-Italian clients. Permits: 1 year, renewable for up to 2 years. The Impatriate Regime may apply from year 1 if all conditions are met. Italy also has a Startup Visa for entrepreneurs. Australia: Australia does not have a specific digital nomad visa. Nearest options: Temporary Skill Shortage visa (subclass 482) for employer-sponsored workers, or the Working Holiday Maker visa (subclass 417/462) for those under 35 from eligible countries. Remote workers for foreign companies generally need a standard visa with work rights. The Global Talent visa (subclass 858) is available for highly distinguished individuals. Neither country's nomad/remote work visa offering is as developed as Portugal's D8 or Germany's Freiberufler route.

What are the pension system differences between Australia and Italy?

Australia: Superannuation system — compulsory employer contributions (11.5% from July 2024, rising to 12% from July 2025) to individual super accounts. Access from age 60 (preservation age). Tax on super: 15% on contributions (concessional cap: AUD 30,000/year), 15% on fund earnings, 0% on withdrawals after age 60. Super fund balance can be passed to dependents tax-free; otherwise taxed. Average super balance at retirement ~AUD 150,000–$300,000 (varies widely). Italy: Previdenza sociale (INPS) — defined benefit state pension based on lifetime contributions (contributivo method for most). Full pension at 67 (standard) or 41 years 10 months contributions (early retirement). Average Italian state pension: approximately €1,200–€2,000/month. Supplementary pension (fondi pensione): employee and employer contributions, with tax incentives on contributions. Australia's system is private and fund-based; Italy's is public and benefit-based.

Is it expensive to live in Italy compared to Australia?

Italy is generally cheaper to live in than Australia overall, but with significant variation by city and region. Rome and Milan are comparable to Sydney in cost; southern Italy, smaller cities, and rural areas are significantly cheaper than Australian capitals. Key differences: Housing: Australian capital city rents are high — Sydney central 1-bed averages AUD 2,600/month (~€1,580). Milan central averages €1,200–€1,800/month; Rome €900–€1,400. Groceries: similar or slightly cheaper in Italy. Dining: Italian restaurants are typically cheaper than Australian equivalents. Healthcare: Italy's SSN is free at point of use; Australia's Medicare is free for most services but has gap fees for specialists and private care. Climate and lifestyle: very different — both countries appeal to different preferences. Net assessment: the tax saving from Australia is partially offset by lower Italian living costs — particularly for those choosing to live outside major Italian cities.
From the brief
PT20%qualifying work, 10yr
IT€300kall foreign income, 15yr
GR7%foreign income, 15yr
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