United States vs Italy taxes

Italy looks simple if you only quote 43%. It is not. Residents file IRPEF, then add regional and municipal surtaxes, then disclose foreign property and accounts. The United States looks simple if you only quote 37%. State tax then redraws the map.

National IRPEF bands are 23% up to EUR 28,000, 35% to EUR 50,000 and 43% above that. Local surtaxes make the effective personal rate higher than the national table. Employee social security is separate, with the employee share often around 10% and a larger employer cost. U.S. federal ordinary rates run from 10% to 37%. Payroll taxes exist on both sides. The swing factor on the American side is the state: a Florida resident and a New York City resident are not the same competitor for an Italian salary.

Investment income is one of Italy's flatter corners. Most individual dividends and capital gains are 26%, with 12.5% for many government bonds. Crypto has a separate 33% flat rate from the 2026 tax period in most cases. U.S. long-term federal gains and qualified dividends of 0% to 20% are usually lower, while short-term U.S. gains are ordinary income. Companies face 24% IRES plus generally 3.9% IRAP, versus 21% U.S. federal C-corporation tax plus possible state tax. Standard VAT is 22%.

IVIE and IVAFE are the Italian answer to “no wealth tax.” There is no general tax on worldwide net worth, but Italian residents pay 1.06% IVIE on foreign real estate, with a EUR 200 minimum, and IVAFE of 0.2% on most foreign financial assets or 0.4% when the assets sit in privileged-tax jurisdictions. A U.S. brokerage account and a U.S. house do not become invisible because you took an Italian residence.

Imposta sostitutiva is the inbound exception. From 1 January 2026 the new-resident lump-sum tax is EUR 300,000, with family members generally at EUR 50,000. A valid option can replace ordinary Italian tax on foreign income and can replace IVIE and IVAFE on foreign assets. It is an election with conditions, not a poster rate for every American in Rome. U.S. citizenship tax continues regardless.

Inheritance tax in Italy is generally 4%, 6% or 8% by relationship, which is often gentler than a U.S. taxable estate at up to 40%. Residence can be triggered by presence, residence or domicile for more than 183 days, counting fractions of days. Model IRPEF, IVIE, IVAFE, any substitute-tax election, the U.S. state you leave, and the IRS file you keep.