Payslips
Italian tax wedge relief 2026: cash allowance and tax credit
Payslips · · 2 min read
By Lorenzo Schiavone · calculator developer · updated on
Italy’s ordinary cuneo fiscale relief has been a tax measure since 2025. It adds a tax-free amount for total income up to €20,000, or reduces IRPEF through an extra credit above that level and up to €40,000. It does not reduce the employee contribution rate.
Tax-free cash amount
Up to €20,000 total income, the percentage is 7.1% for annualised employment income up to €8,500, 5.3% above €8,500 up to €15,000, and 4.8% above €15,000. The selected percentage applies to actual eligible employment income, not progressively across bands.
For a full year, €8,000 employment income produces €568; €15,000 produces €795; €18,000 produces €864. For part-year work, annualisation determines the percentage. RAL is not the same as employment income after contributions.
Extra credit above €20,000
For total income above €20,000 and up to €32,000, the theoretical annual credit is €1,000. Above €32,000 it becomes €1,000 × (€40,000 − income) / €8,000, reaching zero at €40,000.
For a full year, €33,000 total income gives €875; €36,000 gives €500; €39,000 gives €125. The credit is prorated by employment days and limited by remaining IRPEF capacity.
Payroll and the tax return
The employer normally applies relief using projected income and checks it at year-end. Other jobs and other relevant income can change entitlement. The 730/2026 has specific fields in section C, line C14, to check 2025 relief.
Cash relief and the extra credit are alternatives determined by income. They are distinct from the trattamento integrativo. Compare your own salary and municipality in the calculator.
Frequently asked questions
Must I apply for this relief? ▾
It is normally applied automatically by the withholding employer. You may request suspension if the income estimate is unreliable and settle entitlement in the return.
Do all employees receive €1,000? ▾
No. Income band, employment days and tax capacity determine the amount. The €1,000 is a theoretical full-year maximum in the fixed-credit band.
Sources and method
- Agenzia delle Entrate · circular 4/E · 16 May 2025
- Agenzia delle Entrate · official rules and guidance
An informational guide to the 2026 rules. Examples are annual estimates under the stated assumptions. Average pay does not reproduce a monthly payslip. Prior-year municipal rates are marked as estimates.