Moving to Italy

Italy is one of the most romanticized relocation destinations on Earth, and for good reason — the food, the art, the architecture, and the sheer density of history are unmatched. For Americans, Italy has become far more practical since 2024, when the government finally launched a dedicated Digital Nomad Visa to sit alongside the long-established Elective Residence Visa used by retirees and passive-income earners. The country also offers some of Europe's most aggressive tax incentives for new residents, from a flat tax for the wealthy to a 7% regime for foreign pensioners who settle in the south.

The trade-off is bureaucracy. Italy's public administration is notoriously slow, paperwork is relentless, and English is far less widely spoken than in Portugal or the Netherlands — learning Italian is close to mandatory for daily life outside the biggest cities and tourist zones. But quality of life is extraordinary: excellent and cheap regional cuisine, a world-class (if uneven) public healthcare system, walkable historic centers, and high-speed rail that connects Rome, Milan, Florence, Bologna, and Naples in a couple of hours. Cost of living varies enormously — Milan and central Rome rival northern Europe, while the south (Puglia, Sicily, Calabria) is among the most affordable regions in Western Europe.

US Tax Obligations

As an American citizen or green card holder, you must continue to file US federal taxes no matter where you live. The two main tools for avoiding double taxation are the Foreign Earned Income Exclusion (FEIE), which lets you exclude up to $132,900 (2026) of earned income, and the Foreign Tax Credit (FTC), which offsets your US tax bill with income tax paid to Italy. Because Italian income-tax rates are relatively high, many Americans employed or self-employed in Italy find the FTC more valuable than the FEIE. You must meet the Physical Presence Test (330 days abroad in a 12-month period) or the Bona Fide Residence Test to use the FEIE.

Italy Tax Residency

If you spend more than 183 days per year in Italy (or have your main home/center of interests there), you become an Italian tax resident and are taxed on your worldwide income. Italy's national income tax (IRPEF) is progressive, and following the 2024 reform is levied in three brackets: 23% up to €28,000, 35% from €28,000 to €50,000, and 43% above €50,000. Regional and municipal surtaxes (typically around 1%–3% combined) apply on top, so effective rates in high-tax regions can exceed the headline figures.

Flat Tax for New Residents (HNW Regime)

Italy's headline incentive for wealthy newcomers lets you pay a fixed annual "substitute" tax on all foreign-source income instead of the progressive rates, regardless of how much foreign income you actually earn. The price of entry has risen sharply: it began at €100,000/year, increased to €200,000 for those electing after August 2024, and rose again to €300,000/year for new entrants from 1 January 2026 (Law No. 199/2025, the 2026 Budget Law), with an additional roughly €50,000/year per included family member. It runs for up to 15 years and requires that you have not been an Italian tax resident for at least 9 of the previous 10 years. Italian-source income is still taxed normally.

7% Flat Tax for Foreign Pensioners

Retirees drawing a foreign pension can elect a flat 7% tax on all foreign-source income (pension, rental, dividends, capital gains) for up to 10 years — provided they move their residence to a qualifying small town in Southern Italy. The population cap for eligible municipalities was historically 20,000 residents; as of April 2026 it was raised to 30,000 residents, unlocking dozens of additional towns across Sicily, Calabria, Sardinia, Puglia, Campania, Basilicata, Abruzzo, and Molise. You must not have been an Italian tax resident in the prior 5 years. This is one of the most retiree-friendly regimes in Europe.

Impatriati (Inbound Worker) Regime

The "Lavoratori Impatriati" regime for people taking up employment or self-employment in Italy was substantially cut back in 2024. It now exempts 50% of qualifying Italian work income (60% if you relocate with a minor child), capped at €600,000 of income, for 5 years — down from the far more generous 70%–90% exemptions of the old scheme. Eligibility rules on prior non-residency and qualification level also tightened.

US–Italy Tax Treaty & Social Security

The US and Italy have a comprehensive income tax treaty that prevents double taxation and reduces withholding on cross-border dividends, interest, and royalties, plus a separate Totalization Agreement that coordinates Social Security so you do not pay into both the US (FICA/self-employment tax) and Italian (INPS) systems on the same earnings, and lets you combine credits toward benefits. US citizens generally cannot fully escape US tax via the Italian flat-tax regimes, so cross-border modeling is essential. Work with a specialist in both systems — firms like Greenback Expat Tax Services or Bright!Tax handle exactly this. Affiliate disclosure: we may earn a commission if you use our Greenback link, at no extra cost to you.

Public Healthcare (SSN)

Italy's Servizio Sanitario Nazionale (SSN) is a public, largely tax-funded system that provides universal coverage and is consistently ranked among the better healthcare systems in the world. Once you are a legal resident, you register with your local health authority (ASL), choose a family doctor (medico di base), and receive a health card (tessera sanitaria). GP visits and hospital care are free or very low cost, and prescriptions are heavily subsidized with small co-pays (tickets).

Americans who are not employed in Italy (retirees on the Elective Residence Visa, some digital nomads) generally cannot enroll for free and instead pay a voluntary annual SSN contribution, currently ranging from about €2,000 up to roughly €2,789 per year depending on income. That single fee then covers you and dependents for the full public system — a strong deal compared to US premiums. Quality is high in the north and center; southern regions and rural areas can have longer waits and fewer facilities.

Private Healthcare

Many expats add private insurance to skip SSN wait times for specialists and elective procedures and to access English-speaking doctors and private clinics. Major private groups include Gruppo San Donato, Humanitas, and GVM. Private health insurance for an American in their 30s–40s typically runs €90–€200/month; expect €200–€400/month for those over 60. A private policy with at least €30,000 of coverage is also required to obtain most Italian visas in the first place.

Prescriptions and Dental

Prescription drugs are dramatically cheaper than in the US and many require no prescription at all at Italian pharmacies (farmacie), which are staffed by knowledgeable pharmacists. Dental care is largely excluded from the SSN for adults and is paid privately, but rates are far below US prices — a cleaning runs €50–€90 and major work is typically 50–70% cheaper than in America.

Opening an Italian Bank Account

You will want an Italian bank account for rent, utilities, receiving income, and satisfying residency paperwork. Major banks include Intesa Sanpaolo, UniCredit, BPER Banca, and the post office bank BancoPosta (Poste Italiane). To open a resident account you generally need your passport, codice fiscale (Italian tax code — the equivalent of an SSN, obtainable from the Agenzia delle Entrate or your consulate), proof of address, and often your residence permit.

As an American, expect friction from FATCA (Foreign Account Tax Compliance Act). Some Italian banks are reluctant to onboard US citizens because of the reporting burden FATCA places on them. Intesa Sanpaolo and UniCredit are usually the most workable for Americans, and the codice fiscale is the single most important document to secure first — get it before you try to open anything.

Digital Banking

Fintech is popular in Italy. N26 and Revolut are widely used for day-to-day spending and hold Italian/EU IBANs, though a mainstream provider like N26 or a traditional bank is better as your primary account for rent and salary. Italy is still more cash-friendly than northern Europe, but cards and contactless are accepted almost everywhere in cities.

Wise (Recommended for Transfers)

For moving money between the US and Italy, Wise (formerly TransferWise) is the tool most expats rely on. Wise gives you the real mid-market exchange rate with transparent, low fees — typically 0.4–0.6% per transfer versus 2–4% at traditional banks. You can hold and convert USD and EUR, receive money in multiple currencies, and use a Wise debit card across Italy and the EU. Set up and verify your Wise account before you leave the US so it is ready when you arrive.

Practical Tips

• Get your codice fiscale first — nearly every other step (bank, rental, SIM, utilities) depends on it. You can request it from an Italian consulate before moving or from the Agenzia delle Entrate once in Italy.
• Keep a US bank account open. Charles Schwab, Fidelity, and Capital One are popular with expats for no-foreign-transaction-fee debit cards and fee-free ATM withdrawals.
• Remember your US FBAR/FATCA reporting: if your foreign accounts total over $10,000 at any point in the year, you must file an FBAR (FinCEN 114), and larger balances trigger Form 8938.
• SEPA transfers within the EU are free or near-free and same/next-day — use them for European bills once your Italian account is live.