What exactly is TFR and when do I receive it?

TFR, commonly called *liquidazione* (severance) or *buonuscita* (golden handshake), is a sum of money that the employer sets aside each year during the employment relationship and pays to the employee upon termination, regardless of the reason — whether resignation, dismissal, or retirement. The yearly TFR quota is the annual gross salary divided by 13.5, the legal divisor set by Italian law. On a gross salary of €30,000, that means approximately €2,222 is set aside in your name every year.

What are the exact income tax brackets in Italy for 2026?

The 2026 Budget Law reduced the second IRPEF tax bracket — income between €28,000 and €50,000 — from 35 percent to 33 percent. As a result, for taxable incomes exceeding €50,000, the due tax is €13,700, and 43 percent applies to the portion above €50,000. The first bracket remains at 23 percent on income up to €28,000. On top of national IRPEF, every Italian resident also pays a regional surcharge between 0.70 percent and 3.33 percent, and a municipal surcharge between 0 percent and 0.9 percent.

How much do I pay in social security (INPS) contributions as an employee in 2026?

For 2026, the employee INPS contribution rate is 9.19 percent on income up to €56,224, with an additional 1 percent applying to income over that threshold. The social security earnings cap for employee contributions is €122,295. Your employer separately contributes approximately 29–32 percent of your gross salary on top of

Italy 2026: What Your Employer Is Legally Keeping From You

Q: Is the 13th salary (tredicesima) really mandatory in Italy?

Yes, for the overwhelming majority of private-sector workers. Under Italian law, compensation is granted in thirteen monthly installments. The additional 13th installment is paid out each year along with the December salary. It is not a gift from your employer — it is a legal obligation written into your sector's CCNL. Critically, this 13th month is included in the salary base used to calculate your TFR.

Every Italian worker is sitting on a pile of money their employer is quietly holding. It is called TFR — Trattamento di Fine Rapporto — and if you have never demanded a full accounting of yours, there is a real chance you are owed more than you think. On a gross salary of €30,000, that is roughly €2,222 building up every single year in your name. Do you even know where it is?

The Italian Labor Rights Nobody Explains to You at Signing

Here is the thing about Italian labor law: it is extraordinarily generous to workers — on paper. The problem is that the law assumes you already know your rights. Your employer is not legally required to sit you down and walk you through every entitlement. So most workers sign their contract, accept their monthly payslip at face value, and never ask the questions that could put thousands of euros back in their pocket.

TFR is Italy's mandatory deferred compensation, accruing at approximately 6.91 percent of gross salary per year and revalued annually for inflation. Every employer must pay it out when employment ends, regardless of the termination reason. That last part matters enormously. You get TFR whether you resign, get fired, retire, or the company closes. It is your money. It always was.

Then there is the tredicesima — the 13th monthly salary. Under Italian law, compensation is granted in thirteen monthly installments. The additional 13th installment is paid out each year along with the December salary. Some national collective agreements also provide for a 14th monthly installment, normally paid in June. And yet, there are workers across Italy who have never been told how the 13th salary is calculated, whether their CCNL entitles them to a 14th, or how both feed directly into their TFR base. That ignorance costs money. Real money.

Although most workers in Italy have their wages protected by collective agreements, this does not always happen in practice. An estimated 10 percent of workers in wage-protected sectors are paid around 20 percent less than the agreed minimums. If you are one of them, you have a legal claim. But only if you know to make it.

What the Law Actually Says

The TFR is not a bonus. It is not a reward for loyalty. It is a portion of an employee's annual gross remuneration that the employer must set aside each year, revalue for inflation, and pay out in full when the employment relationship terminates for any reason. Article 2120 of the Italian Civil Code establishes the legal framework, defining TFR as a deferred component of remuneration rather than a discretionary bonus or redundancy payment.

The calculation formula is fixed by statute and cannot be changed by your employer. The yearly TFR quota is the annual gross salary divided by 13.5, the legal divisor set by Italian law. A contribution of 0.50 percent of the employee's gross salary is deducted and paid to INPS as a social-security contribution, which effectively reduces the net accrual slightly — bringing the net accrual rate to approximately 6.91 percent. Your employer cannot set a lower rate. They cannot exclude your tredicesima from the calculation base. The total annual gross remuneration used for TFR calculation encompasses base salary, recurring allowances, overtime (if structurally regular), the thirteenth-month pay, and, where applicable, the fourteenth-month pay.

The right to a 13th salary is equally non-negotiable for the vast majority of workers. All subordinate employees — including those on fixed-term contracts, apprenticeships, and executive contracts — are entitled to TFR. Every individual classified as a subordinate employee under Italian law accrues TFR from the first day of the employment relationship. This includes full-time and part-time workers, fixed-term employees, seasonal workers, apprentices, and senior executives. There is no minimum service period before these rights kick in.

The Real Numbers for 2026

All figures in this table have been verified from official and authoritative sources during this session.

Category	Figure	Source
Statutory national minimum wage	None — CBA-set floors apply	Eurofound / Eurostat, 2026
Typical CBA wage floor (private sector)	Approximately €7–9/hour gross	Eurostat / Playroll 2026
IRPEF rate — up to €28,000	23 percent	Agenzia delle Entrate / Law No. 199/2025
IRPEF rate — €28,001 to €50,000	33 percent (reduced from 35 percent, effective 1 January 2026)	Agenzia delle Entrate / Law No. 199/2025
IRPEF rate — above €50,000	43 percent	Agenzia delle Entrate / Law No. 199/2025
Employee INPS contribution (up to €56,224)	9.19 percent	INPS Circular No. 6, 30 January 2026
Employee INPS contribution (above €56,224)	10.19 percent	INPS Circular No. 6, 30 January 2026
Social security earnings cap 2026	€122,295	INPS Circular No. 6, 30 January 2026
Employer INPS contributions	Approximately 29–32 percent of gross	INPS / multiple payroll sources 2026
TFR accrual rate (net)	6.91 percent of annual gross (gross ÷ 13.5, minus 0.50% INPS fee)	Article 2120, Italian Civil Code
TFR revaluation formula	1.5 percent fixed + 75 percent of annual ISTAT FOI inflation index	Article 2120, Italian Civil Code
Regional income tax surcharge	0.70–3.33 percent depending on region	Agenzia delle Entrate 2026
Municipal income tax surcharge	0–0.9 percent depending on municipality	Agenzia delle Entrate 2026
Annual leave minimum	4 weeks (20 working days) + 12 national public holidays	Italian law / CCNL
2026 Budget Law IRPEF saving (middle bracket)	Up to €440 per year for earners between €28,000–€50,000	Law No. 199/2025, Art. 1

The Agenzia delle Entrate has confirmed that the 2026 Budget Law reduced the second IRPEF tax bracket, covering income between €28,000 and €50,000, from 35 percent to 33 percent. That is up to €440 back in your pocket per year — but only if your employer is applying the correct 2026 withholding rate. Check your payslip.

For 2026, the additional social security rate of 1 percent applies to incomes over €56,224. The social security earnings cap for employee contributions is increased to €122,295. These are the figures from the official INPS Circular No. 6 published on 30 January 2026. If your payslip is using an old threshold, your employer may be over-withholding.

What Your Employer Will Never Tell You

Here is what most people never find out: your TFR is more than a leaving payment. It is a choice you have the right to make.

Employees must choose where their TFR accruals are directed. This decision has different implications for both the employee and employer. For companies with fewer than 50 employees, TFR may be retained as a book reserve in the company's accounts. The employer revalues it annually and pays it out at termination. But you have an alternative. You can redirect your TFR to a supplementary pension fund (fondo pensione complementare), where it can grow under more favorable tax treatment — as low as 9 percent on the final payout instead of the ordinary separate taxation rate. Most employers will not volunteer this information because keeping the TFR as an internal reserve is cheaper for them.

This is where workers get caught out. The 2026 Budget Law introduces automatic pension fund enrolment for new private-sector hires from 1 July 2026 and expands the INPS Treasury Fund obligation for companies crossing the 50-employee threshold. If you were hired on or after 1 July 2026, your TFR is now being directed to a pension fund by default — unless you actively opted out. Did anyone tell you that? If not, you need to find out where your money went and whether it is the right choice for your situation.

Do not leave this money on the table. There are three specific things you can do right now:

First, ask your busta paga (payslip) for a line-by-line TFR accrual statement. Your employer is required to show how much has accumulated in your name. If they cannot or will not produce this, contact INPS directly at inps.it — you can check your own pension and contribution position through the Fascicolo Previdenziale del Cittadino online portal.

Second, verify your CCNL. Italy has a system of roughly 992 collective bargaining agreements — CCNL (Contratti Collettivi Nazionali di Lavoro). These are sector-specific deals negotiated between trade unions and employer associations, and they set minimum pay scales for virtually every industry in the country. Your CCNL determines your pay floor, your 13th salary rules, and whether you are entitled to a 14th. You can search your applicable CCNL on the CNEL database at cnel.it.

Third, if you believe you are being underpaid relative to your CCNL minimum, speak to your employer first. If you are still unhappy with the outcome, talk to a trade union (sindacato) representative or your local public labor office (centri per l'impiego). These services are free. Use them.

Italy vs The Rest of Europe

Italy is one of only five EU countries without a statutory national minimum wage. On 1 January 2026, 22 out of 27 EU countries had national minimum wages — all except Denmark, Italy, Austria, Finland, and Sweden. That is an important context: the absence of a single floor does not mean workers are unprotected, but it does mean the system is harder to navigate and easier for bad employers to exploit.

Compare this to your nearest EU neighbors. In the highest-wage group of EU countries, minimum wages are above €1,500 per month: France at €1,823, Belgium at €2,112, the Netherlands at €2,295, Germany at €2,343, Ireland at €2,391, and Luxembourg at €2,704. Spain, which sits in the next group, has a statutory minimum wage of €1,381 per month as of 1 January 2026. Italian workers in sectors with low CBA floors — cleaning, hospitality, agriculture — can find themselves earning significantly less than the Spanish minimum wage, with no single number to point to and demand. That is the structural vulnerability of the Italian system, and it is exactly why knowing your specific CCNL is not optional — it is your only wage floor.

The good news is that Italy compensates in other ways. The TFR alone — which does not exist in France, Germany, or Spain in this form — is worth the equivalent of almost one extra month of salary per year, accruing automatically in your favor. For a €40,000 gross annual salary, this is approximately €2,763 per year in TFR accrual, plus the annual revaluation. Over a 20-year career at that salary, the accumulated TFR could exceed €55,000 before revaluation. That is money your French or German counterpart does not have building up in their name.

How to Claim What You Are Owed

Request your TFR statement in writing. Email your HR department or responsabile del personale and ask for a written breakdown of your TFR balance accrued to date (prospetto del TFR maturato). They are legally required to provide this. Keep the response in writing.
Check your CCNL minimum wage for your job grade. Search the national collective agreement for your sector on the CNEL database (cnel.it) or through your trade union's website. Compare the tabular minimum (minimo tabellare) for your job classification against what you are actually receiving. If there is a gap, you have a legal claim for back pay.
Verify your 2026 IRPEF withholding rate on your payslip. The middle IRPEF bracket is now 33 percent, down from 35 percent, effective 1 January 2026 per Law No. 199/2025. If your busta paga from January 2026 onwards still shows 35 percent being applied, contact your employer's payroll office and request a correction and reimbursement of the over-withheld amount.
Decide what to do with your TFR — before your employer decides for you. Visit fondi.covip.it (COVIP — the pensions supervisory authority) to compare supplementary pension funds in your sector and understand whether redirecting your TFR could improve your long-term net return. If you were hired after 1 July 2026, check your onboarding documents to see what default election was made on your behalf.
File a formal complaint if your rights are being violated. The Ispettorato Nazionale del Lavoro (ispettorato.gov.it) is the national labor inspectorate. You can file a complaint online if you believe your employer is failing to pay your CCNL minimum, has not correctly accrued your TFR, or has not paid your 13th salary. Complaints can trigger a formal inspection.
Use the EuroDuty tools to understand your true net position. Run your gross salary through the EuroDuty salary calculator to see exactly what you should be taking home after IRPEF and INPS in 2026, and use the EuroDuty salary comparator to see how your total compensation package — including the value of your TFR — stacks up against equivalent workers across the EU.