Effective April 7, 2026, Italy enacted Law No. 34 of March 11, 2026, raising the population threshold for eligible municipalities from 20,000 to 30,000 residents. The result? 74 previously excluded municipalities across Southern Italy now qualify — including some genuinely well-serviced, expat-friendly towns.

That might sound like a bureaucratic detail, but trust me — it's a big deal. Many of those newly added towns aren't tiny, remote villages with one café and spotty internet. They're functioning mid-sized towns with hospitals, schools, solid transport links, and genuine quality of life.

Who Are the New Stars of the Show?

Puglia, which sees the largest proportional gain, adds towns like:

How It Works: The Full Picture

The Tax Benefit

Under this regime, you pay a single flat 7% substitute tax on all foreign-sourced income. This covers more than just your pension — investment income, rental income from properties abroad, capital gains from foreign sources — all taxed at just 7%. The regime lasts for 10 years from the date you become an Italian tax resident.

The Bonus Perks

The 7% rate is the headline, but the supporting cast is impressive too. Participants are also exempt from:

Who Qualifies?

Great deal — but not everyone gets in. Here's what you need to tick off:

You are receiving aforeign pension(public or private, originating outside Italy)
You havenot been an Italian tax residentfor at least 9 of the previous 10 years
You plan to live in aneligible municipalityunder 30,000 residents in a qualifying Southern Italian region
You are currently a tax resident of acountry with a tax treaty with Italy(US, UK, Canada, EU, Australia, Japan, Switzerland, and more)
You elect the regime in yourfirst Italian tax returnafter becoming a resident — you can't apply retroactively

Where Can You Live? Eligible Regions

The qualifying regions are all in Southern Italy and the islands. Within each region, your municipality must have a population below 30,000 residents.

Additionally, certain municipalities in Lazio, Marche, and Umbria may qualify if they fall within earthquake-affected zones designated by Italian law. Use Italy's national statistics database (ISTAT) to verify current population data for any town you're considering.

Molise

Campania

Puglia

Basilicata

Calabria

Sicily

Abruzzo

Sardinia

What Didn't Change in 2026

The 2026 budget law made various adjustments to Italy's broader tax landscape — but the rules of the 7% regime itself remained unchanged. The only modification was the population threshold expansion. Everything else — the 10-year duration, the eligibility requirements, the exemptions from IVIE and IVAFE — stays exactly as it was.

Practical Tips for Finding Your Ideal Town

Start with the region, then the town.
Each qualifying region has its own character. Puglia is warm, coastal, and increasingly cosmopolitan. Calabria is rugged and wonderfully undiscovered. Sicily is its own universe. Abruzzo offers mountains, Adriatic coastline, and excellent food. Get a feel for the region before narrowing down to specific towns.
Verify the population.
ISTAT publishes current municipal population data. A town previously over 20,000 may now qualify under the new 30,000 threshold — don't rule out places you may have dismissed before April 2026.
Consider infrastructure seriously.
A 7% tax rate won't make up for being 90 minutes from the nearest hospital. The good news: many newly eligible towns like Ostuni have excellent amenities and established expat communities.
Visit before you commit.
Italy in summer and Italy in February are very different experiences. If you can, spend time in a town during the off-season to get a realistic sense of daily life.
Work with a qualified Italian tax professional.
This regime has real financial upside — which means it's worth doing properly. A commercialista with experience in this regime can navigate the application process and ensure everything is filed correctly.

The Bottom Line

Italy's flat 7% tax regime is one of the most genuinely compelling incentives for foreign retirees anywhere in the world — and the April 2026 expansion has made it accessible to even more towns, including some that are genuinely attractive, well-serviced places to live.

If you've been dreaming about spending your retirement years in Southern Italy — with a glass of Primitivo in hand, a terracotta-roofed village on the hillside, and a tax bill that would make your accountant double-check the math — this regime is absolutely worth exploring seriously.

As always, do your homework, work with qualified professionals, and make sure you understand what you're committing to before you file. But if you're a retiree with foreign income looking for a place to put down roots? Italy just made itself very hard to ignore.

Have questions about the move to Italy? I've been through it — and I'm here to help. Browse my guides and resources, and feel free to reach out anytime.

— Cara Ferraro, The Italy Move

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Disclaimer: This post is for informational purposes only and does not constitute legal or tax advice. Tax laws change frequently — always consult a qualified Italian tax professional (commercialista) for guidance specific to your situation. Contact: theitalymove@silvercompasspublishing.com

Sources & Further Reading

Italy flat tax 7% for foreign pensioners: 74 new eligible municipalities from April 2026 — Studio BCZ
Italy's 7% Flat Tax for Foreign Pensioners Just Got a Lot More Interesting — IMI Daily
Italy's 7% Flat Tax Regime for Foreign Retirees: 2025 Updates — ItalianTaxes.com
Italian 7% Flat Tax for Foreign Pensioners — Italy Law Firms
Retiring in a 7% Region in Italy — Relocate.World
Italy's 7% Tax Towns: 2026 List of Eligible Municipalities — Magic Towns
Italy Expat Tax Guide 2026 — CountryTaxCalc

Italy's 7% Tax Plan - Everything You Need to Know

🗞 April 2026 Update

74 New Towns Just Joined the Party

Who Are the New Stars of the Show?

How It Works: The Full Picture

The Tax Benefit

The Bonus Perks

Who Qualifies?

Where Can You Live? Eligible Regions

What Didn't Change in 2026

Practical Tips for Finding Your Ideal Town

Start with the region, then the town.

Verify the population.

Consider infrastructure seriously.

Visit before you commit.

Work with a qualified Italian tax professional.

The Bottom Line

Ready to Plan Your Italy Move?

Sources & Further Reading

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