In the second article dedicated to the Italian pay slips we have mentioned a very significant element – the taxable income, which in our case was equal to 1.270,43 €. This amount is IRPEF taxable (Imposta sul reddito delle persone fisiche – Natural Person Income Tax).
In order to identify this amount on out pay slip, we need to be aware that IRPEF calculation is based on so called income brackets, identified as follows:
| ANNUAL INCOME BRACKETS | TAX RATE | MONTHLY INCOME BRACKETS |
|---|---|---|
| up to 15.000 € | 23% | 1.250,00 € |
| up to 28.000 € | 27% | 1.083,33 € |
| up to 55.000 € | 38% | 2.250,00 € |
| up to 75.000 € | 41% | 1.666,66 € |
| 75.000 € and more (=) | 43% |
The IRPEF gross tax, based on our taxable income of 1.270,43 € as well as on the income brackets, equals 293,71 €. Let’s have a look and find out how did we come to this result.
Our taxable income was said to be 1.270,43 €, so the following tax rates were applied:
| MONTHLY INCOME BRACKETS | TAX RATE | MONTHLY TAX |
|---|---|---|
| 1.250,00 € | 23% | 287,50 € |
| 20,43 € | 27% | 5,51 € |
| TAXABLE INCOME 1.270,43 € | 293,01 € |
Our pay slip becomes more clear now
| NET SALARY | ||
|---|---|---|
Gross salary |
1.399,00 € | |
| less (-) | Social security contributions 9,19%(INPS) | 128,57 € |
| equals (=) | Taxable income | 1.270,43 € |
| less (-) | (IRPEF deduction less tax exemptions) | 293,01 € |
| equals (=) | Net salary free of deductions | |
| more (+) | Family allowance | |
| equals (=) | Net salary presented on the pay slip |
All the articles dedicated to Italian pay slips are available under the following links:
The first article ‘How to read and understand Italian pay slips (busta paga)?’
The second article ‘Social security contributions’
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