Become Italian tax resident and Italy taxes your worldwide income — and, unusually, your worldwide assets. But retirees who pick the right town can swap all of it for a 7% flat tax. Here's what actually applies in 2026, and what Americans and Canadians keep owing back home.
Figures verified 8 July 2026Italy taxes residents on worldwide income at progressive national rates. These are the 2026 brackets, after the 2026 Budget Law (Law 199/2025) cut the middle rate from 35% to 33%:
| Taxable income | Rate |
|---|---|
| Up to €28,000 | 23% |
| €28,001 – €50,000 | 33% |
| Above €50,000 | 43% |
Plus a regional surtax of roughly 1.23–3.33% and a municipal surtax of up to about 0.9%, depending on where you live. The 33% cut is clawed back for incomes above €200,000. Investment income is generally taxed separately at 26% flat.
| United States | Canada | |
|---|---|---|
| Keep filing? | Yes — the US taxes citizens on worldwide income wherever they live. FEIE ($132,900 for 2026) or foreign tax credits offset most of it. | Generally no, once you cease Canadian tax residency — but watch departure tax on deemed disposition of assets. |
| Treaty | US–Italy treaty (signed 1999, in force 2009). Private pensions and 401(k)/IRA withdrawals: generally taxed where you live. US Social Security treatment depends on citizenship status — get advice. | Canada–Italy treaty in force. Canada may withhold on periodic pension payments (CPP, OAS, RRIF) — the treaty caps and credits need professional mapping. |
| Accounts reporting | FBAR if foreign accounts exceed $10,000 aggregate; FATCA Form 8938 at $200k (single, living abroad). Italy's side: quadro RW foreign-asset reporting. | Standard CRA rules until departure; form T1161/T1243 territory on exit. |
| Social security | US–Italy totalization agreement in force — no double contributions; credits combine. | Canada–Italy social security agreement — CPP/OAS coordinate and export. |
Who qualifies, which towns count after the April 2026 expansion, and worked examples of what it saves.
Read the guide →Social Security, IRAs, 401(k)s, and Roths — what's settled, what's grey, and the questions for your advisor.
The foreign-asset taxes nobody warns you about, quadro RW reporting, and what the 7% regime exempts.