Italian Revenue Agency clarifies flat‑tax on salary raises and bonuses

The Italian Revenue Agency issued Circular n. 3/E on 24 June 2026, expanding guidance on the flat‑tax regime introduced by the 2026 Budget Law (Law 199/2025). The regime replaces IRPEF and regional/municipal add‑ons with a 5 % substitute tax on salary increases for private‑sector employees earning up to €33,000, and a 15 % tax on night‑, holiday‑, weekend‑ and shift‑related allowances for those earning up to €40,000, capped at €1,500 per year.

The circular confirms that the 5 % rate applies to increments arising from collective‑agreement renewals signed between 2024 and 2026, even when the amounts relate to periods before the contracts’ signing. It also extends the benefit to payments for suppressed holidays, vacation pay, "super‑minimum" bonuses, and to availability allowances such as on‑call pay, regardless of whether the worker was actually called in. For vertical part‑time arrangements, the tax relief applies only when work is performed on the designated rest day; extra hours under flexible clauses are excluded.

Overall, the agency’s clarifications aim to define the scope of the substitute tax for various wage components, ensuring consistent application across the private sector for the 2026 fiscal year.