How your US retirement income is taxed here.
These come straight from the same country data the Glidepath engine uses to calculate your tax. Not a marketing summary.
Models the 7% pensioner regime: a flat 7% tax on all foreign income - pension, Social Security, capital gains, and dividends - for 10 years. Social Security is treaty-nuanced. The treaty gives Italy the first taxing right (Article 18(2)), but the US saving clause still lets the US tax its own citizens (see the compliance notes).
Requires a qualifying southern town and not being Italian-resident the prior 5 years. Town population cap is ≤20k, rising to ≤30k under Law 34/2026 (effective ~7 April 2026).
Roth accounts are not tax-free in Italy. The treaty (Article 18(1)) gives Italy the sole right to tax US private retirement distributions, and Italian rulings on 401(k)/IRA withdrawals (interpelli 462/2021 and 616/2021) tax them like pension income with no Roth carve-out. The plan taxes the full Roth withdrawal - 7% inside the regime, regular IRPEF outside it. A toggle models the favorable reading, where taxed contributions come out free.
The regime also waives the IVIE/IVAFE foreign-asset wealth taxes and Quadro RW foreign-account reporting. Without it, you owe IVIE at 1.06%/yr on foreign real estate and IVAFE at 0.2%/yr on foreign financial assets, on top of regular IRPEF of 23–43% plus 26% on gains - much higher. Standard IRPEF also carries regional and municipal surcharges (addizionali), modeled at a combined 2.4% midpoint; actual rates vary roughly 1.4–4.2% by region and comune. IVIE applies only to real estate outside Italy, so a home you buy in Italy is not IVIE-taxed - though it is subject to Italy's IMU (municipal property tax), which this projection does not model. IVAFE is charged on the whole modeled portfolio, including US retirement wrappers (IRA/401(k)/Roth); whether it legally reaches those is contested.
The plan models Italy's pension-income tax credit (income-tax code art. 13). It is €1,955 up to €8,500 of total income, then tapers to zero at €50,000, and it applies on the standard IRPEF branch only, never inside the flat 7% regime. Because that credit exactly cancels the tax due at €8,500, a small pension can come out owing nothing. The plan does not model detrazioni for dependents, so your real Italian bill can be somewhat lower than shown if you have any. An accountant can size the remaining gap for your situation.
What could change this.
Your low 7% tax lasts only 10 years, then jumps to full Italian income tax late in retirement, when you can least absorb it.
When: Year 11 after you move (the regime is non-renewable)
It is unsettled whether the US or Italy taxes your Social Security first, so your final bill depends on the filing position your preparer takes.
When: Filing-position dependent; no near-term resolution
Italy taxes Roth withdrawals, but whether the whole amount or only the growth is taxable is unresolved - the plan taxes the full amount.
When: No on-point ruling; filing-position dependent
Compliance traps that catch US retirees here.
Investment products that look ordinary to locals can be tax traps for US citizens. These are the ones specific to Italy.
7% regime leaves residual US tax; Social Security treatment is treaty-nuanced
Your US tax is not zero here: the 7% Italian rate is a low foreign tax credit, so the IRS still collects the gap on investment income.
Italian unit-linked life-insurance / polizza wrappers carry PFIC exposure
The IRS treats Italian unit-linked life policies and local investment funds as PFICs, an expensive tax trap, no matter how Italy taxes them.
7% election can be lost retroactively
Miss the annual payment or move out of a qualifying town and you lose the 7% deal for that year, snapping back to full Italian tax.
Healthcare as a retiree.
Retired residents can join the public health service (SSN) by paying a voluntary yearly fee (iscrizione volontaria). The fee is based on income: 7.5% up to about €20,658, then 4% above that. Since 2024 it runs from €2,000 to €2,788.87 a year for each person who registers. One registration also covers family members who are financially dependent on you, but a spouse with their own retirement income registers and pays separately. The Elective Residence Visa itself requires private health insurance (at least €30,000 of cover) to enter Italy. So many retirees keep a private or international health plan for the first year before joining the SSN.
The €2,000–2,788.87 per year SSN fee is charged once per registration and is based on your worldwide income. Italian law makes that registration valid for financially dependent family members, so it covers a spouse whose own income stays under €2,840.51 a year. Two retirees who each draw their own income both register, so this plan charges the fee twice for a couple. The Elective Residence Visa still requires private insurance (at least €30,000 of cover, including repatriation) for entry and renewal. So private cover is generally needed for your first year, even if you switch to the SSN later.
Models the voluntary-SSN path at its statutory minimum of 2,000 EUR, plus the national-average out-of-pocket spending tracked by GIMBE (an Italian health-research foundation). Higher incomes pay up to 2,788.87 EUR per year. Couples who stay fully private instead pay 2,400-7,200 EUR per year in premiums.
The retirement visa route.
The Elective Residence Visa (Residenza Elettiva) is Italy's long-stay route for retirees who can live on passive income without working. You must show enough steady income plus private health insurance.
- Stable passive income of about €31,000–32,000 per year for a single applicant (consulates often ask for more).
- About €38,000 per year for a married couple.
- Income must be passive (pensions, investments, or rents), since the visa allows no employment.
- Private health insurance covering at least €30,000, valid across Italy and the Schengen area, including repatriation.
What could this cost you?
A fast, illustrative estimate for Italy - no login, nothing stored. Every country page carries its own, tuned to that country's tax treatment.
Your monthly spending power in Italy (7% south) on about $1M
These odds are about a withdrawal this size holding up over time - not about how far that amount goes here.
A lean lifestyle in Italy (7% south)
Day to day, that looks like a small apartment in a lower-cost town, transit or one older economy car, cooking at home with the odd cheap meal out. For health, the public health system, with out-of-pocket costs a real worry.
As a US citizen, you keep filing US taxes wherever you live.
Italy (7% south): 7% flat on all foreign income (10 yrs, southern town ≤20k pop.)
This is a fast estimate, not the full simulation, and not financial advice. It only flags the tax question. The full plan works out what you'd actually owe on each side of the border. It also models real balances, every account type, and healthcare, year by year.
The terms you'll run into.
- Regime agevolato 7%
- A special substitute tax: foreign pensioners who move to a qualifying small southern town pay a flat 7% on all foreign income for 10 tax years. You must not have been an Italian resident in the prior 5 years.
- IRPEF
- Italy's regular personal income tax, charged on a progressive scale from 23% to 43%. It applies to residents who do not use (or have used up) the 7% pensioner regime.
- Comune agevolato
- An eligible municipality (population cap raised from 20,000 to 30,000, effective ~7 April 2026) in the south or a 2009/2016 earthquake-reconstruction zone.
- Visto per Residenza Elettiva
- Italy's long-stay retirement visa for the financially self-sufficient living on passive income, with no right to work - the practical entry route for a US retiree.
- IVIE / IVAFE
- Italy's yearly wealth taxes on foreign assets: IVIE taxes foreign real estate at 1.06% of value, IVAFE taxes foreign financial assets at 0.2% of value. Both are waived for beneficiaries of the 7% regime.
- Quadro RW
- The foreign-asset/account disclosure section of the Italian tax return (the local FBAR analogue); the 7% regime exempts the beneficiary from filing it.
- Iscrizione volontaria al SSN
- Voluntary enrollment in Italy's national health service for non-working residents, via an annual income-based fee.
US terms that follow you to every country
- PFIC
- Passive Foreign Investment Company - the IRS label for almost any non-US fund, ETF, or pooled investment. Owning one triggers punitive US tax rates and Form 8621 paperwork. The single most common trap for Americans investing abroad.
- FBAR
- Foreign Bank Account Report (FinCEN Form 114). A yearly online filing that lists your non-US accounts once they total over $10,000. Not a tax - just a report - but penalties for skipping it are severe.
- FATCA
- A US law that makes foreign banks report American customers to the IRS. It is why some foreign banks refuse US clients, and why you may also file Form 8938 with your return.
- Form 8621
- The IRS form you must file for each PFIC you own. Complex enough that most preparers charge per form, per year.
- Form 8938
- The FATCA companion form filed with your US return, listing foreign financial assets above a threshold. Overlaps with, but does not replace, the FBAR.
- Forms 3520/3520-A
- US reporting forms for foreign trusts. Some foreign retirement and insurance wrappers count as trusts, dragging their owners into this heavy annual paperwork.
- UCITS
- The standard European fund format (an EU regulatory label). Fine for Europeans - but to the IRS, a UCITS fund is a PFIC.
- Totalization agreement
- A US bilateral deal that stops you paying Social Security tax to two countries on the same work, and lets work credits in each country count toward one benefit.
- Foreign tax credit
- The US mechanism that stops double taxation: tax you pay to your residence country offsets your US bill on the same income, dollar for dollar. You effectively pay the higher of the two totals - not both.
- Saving clause
- The clause in every US tax treaty that lets the US keep taxing its own citizens as if the treaty did not exist. It is why moving abroad never ends US filing.
- Foreign grantor trust
- The IRS classification some foreign pension and insurance wrappers fall into. It means the owner reports the trust personally, on Forms 3520/3520-A, every year.
Nothing on this page is invented.
Confidence: verified. Last verified July 17, 2026. Every figure above comes from one of the sources below - the same country data the full plan uses to compute your projection.
See the full country-by-country build sheet on the coverage page.