How to Read Your Payslip: Gross to Net Explained [2026]

Every month you receive your payslip, but have you ever wondered why the net amount in your bank account is so different from the gross salary stated in your contract? The difference between gross and net salary is one of the most searched topics by Italian workers, yet few can precisely explain all the items that make up a payslip. In this complete guide, we will analyze every single item, from INPS contributions to IRPEF, from deductions to regional and municipal surcharges, all the way to the supplementary tax credit (formerly the "Renzi bonus"). By the end, you'll be able to read your payslip like a professional.

The Payslip: Structure and Main Items

The payslip (or pay stub) is the document that the employer delivers to the employee on a monthly basis. It generally consists of three sections:

• Header: employer details, employee details, job title, level, hire date, applicable collective bargaining agreement (CCNL)
• Body: breakdown of pay items (base pay, cost-of-living allowance, seniority increments, overtime, bonuses) and withholdings (INPS contributions, IRPEF, surcharges)
• Footer: summary with total earnings, total withholdings, and net pay

Pay items (earnings)

The main items that make up gross pay are:

• Base pay (minimum contractual wage): the amount set by the collective bargaining agreement (CCNL) for the specific job classification level
• Cost-of-living allowance (contingenza): an allowance that used to compensate for inflation, frozen since 1992
• Seniority increments: periodic raises based on years of service
• Superminimum: any additional amount negotiated individually
• Overtime: hours worked beyond the contractual schedule, with premiums of 15-50%
• Various allowances: shift, travel, meal, transport, etc.

From Gross to Net Salary: The Complete Process

Here is the step-by-step process that transforms gross pay into net pay:

Our 2026 net salary calculator performs all these calculations automatically: simply enter your gross annual salary and you'll get the monthly net pay with a detailed breakdown of every item.

Employee INPS Social Security Contributions

INPS social security contributions fund future pensions, sick leave, maternity leave, unemployment benefits, and other social protections. They are divided into:

• Employer's share: approximately 30-32% of gross pay (not shown on the employee's payslip because it doesn't come out of their salary)
• Employee's share: 9.19% of gross pay (withheld from the payslip)

For incomes up to 35,000 euros per year, the 2026 contribution reduction (payroll tax wedge cut) has been confirmed, which lowers the effective rate for employees. This results in a higher monthly net pay compared to the standard calculation.

Practical example

With a monthly gross salary of 2,000 euros:

Employee INPS contributions = 2,000 x 9.19% = 183.80 euros

With the tax wedge reduction for incomes up to 25,000 euros, the effective contributions can drop to approximately 2,000 x 2.19% = 43.80 euros (saving 140 euros per month).

IRPEF: The 2026 Tax Brackets

IRPEF (Personal Income Tax) is the main tax levied on workers' income. Since 2024, the IRPEF system has been reformed into three brackets, confirmed for 2026 as well:

IRPEF calculation example

For an annual taxable income of 32,000 euros:

On the first 28,000 euros: 28,000 x 23% = 6,440 euros

On the remaining 4,000 euros: 4,000 x 35% = 1,400 euros

Total gross IRPEF = 6,440 + 1,400 = 7,840 euros

Monthly gross IRPEF (over 12 months) = 7,840 / 12 = 653.33 euros

Employment Income Deductions

Gross IRPEF is reduced by applicable deductions. The main ones for employees are:

• Employment income deduction: varies based on total income. For incomes up to 15,000 euros, it is 1,955 euros; for incomes between 15,000 and 28,000 euros, it gradually decreases to 1,910 euros; for incomes between 28,000 and 50,000 euros, it further reduces; for incomes above 50,000 euros, it drops to zero.
• Deductions for dependent family members: for a spouse, for children (over 21 years old, since the Universal Allowance has replaced deductions for children under 21), and for other dependent family members.

Employment income deduction example

For an annual income of 25,000 euros:

Deduction = 1,910 + 1,190 x (28,000 - 25,000) / 13,000 = 1,910 + 274.62 = 2,184.62 euros per year

Monthly deduction = 2,184.62 / 12 = 182.05 euros

Regional and Municipal Surcharges

In addition to IRPEF, two surcharges are levied on wages:

Regional IRPEF surcharge

Each Region sets its own rate within the limits established by the State (from 1.23% to 3.33%). Some regions apply progressive rates, others a flat rate. Examples for 2026:

• Lombardy: 1.23% (minimum rate) for incomes up to 15,000 euros, up to 1.74% for higher incomes
• Lazio: from 1.73% to 3.33% (among the highest in Italy)
• Veneto: 1.23% flat rate

Municipal IRPEF surcharge

Each Municipality can set a rate up to 0.8%, with a possible exemption threshold. The average rate is around 0.5-0.8%.

The surcharges are calculated on the previous year's income and withheld from the payslip in monthly installments (generally from March to November for the regional surcharge, and from January to December for the municipal advance payment).

The Supplementary Tax Credit (Formerly the Renzi Bonus / Payroll Tax Wedge Bonus)

The supplementary tax credit is a payslip bonus that in 2026 is available to employees with total income up to 28,000 euros. The maximum amount is 1,200 euros per year (100 euros per month).

For incomes between 28,001 and 40,000 euros, the supplementary credit is no longer available as a direct bonus, but the payroll tax wedge cut produces an equivalent effect through reduced contribution rates or an additional deduction.

Who is entitled to the supplementary tax credit?

• Total income up to 15,000 euros: full amount (100 euros/month)
• Income from 15,001 to 28,000 euros: available only if deductions exceed gross IRPEF (a condition verified by the employer during the year-end adjustment)
• Income above 28,000 euros: not available

The 13th and 14th Month Salary

The 13th month salary (Christmas bonus) is provided for all employees and is paid in December. It corresponds to one-twelfth of the annual pay for each month worked during the year. INPS contributions and IRPEF also apply to the 13th month salary, but the supplementary tax credit does not.

The 14th month salary is provided only by certain collective bargaining agreements (retail, tourism, transport, chemical industry, etc.) and is generally paid in June or July. Not all workers are entitled to it.

Complete Example: From 28,000 Euros Gross to Monthly Net

Let's take a permanent full-time employee with a gross annual salary of 28,000 euros, with no spouse or dependent children, residing in Lombardy (Milan):

This means that with a gross annual salary of 28,000 euros, the worker takes home approximately 73% of the monthly gross. The percentage of withholdings decreases for lower gross salaries and increases for higher ones, due to the progressive nature of IRPEF.

How to Verify Your Payslip Is Correct

Here are some checks every worker should perform:

1. Verify your job classification level: compare it with the applicable collective bargaining agreement (CCNL)
2. Check the hours worked: regular hours, overtime, vacation days, leave
3. Verify the INPS contribution calculation: 9.19% (or reduced rate if applicable) of gross pay
4. Check the IRPEF: verify that the tax brackets are applied correctly
5. Verify the deductions: make sure all applicable deductions are being applied
6. Check the accrued severance pay (TFR): approximately 6.91% of gross pay is set aside each month

Frequently Asked Questions

How much net pay from 1,500 euros gross?

With a monthly gross salary of 1,500 euros (gross annual salary of approximately 19,500 euros over 13 months), after INPS contributions, IRPEF, and surcharges, the net pay will be approximately 1,200-1,250 euros, including the supplementary tax credit. Use our net salary calculator for a precise calculation.

How much net pay from 2,000 euros gross?

With 2,000 euros gross per month (gross annual salary of approximately 26,000 euros), the net pay is around 1,550-1,600 euros, depending on the region of residence and applicable deductions.

Why is the 13th month salary lower than usual?

The 13th month salary is subject to INPS contributions and IRPEF just like regular monthly payments, but it does not benefit from the supplementary tax credit (100 euros/month). Additionally, the IRPEF on the 13th month may be calculated at a higher average rate due to the year-end tax adjustment.

What changes between 13 and 14 monthly payments for net pay?

With 14 monthly payments, the gross annual salary is divided by 14 instead of 13, so each individual gross monthly payment is lower. However, the total annual net pay remains essentially the same, because taxes are calculated on the total annual income.

Is the payroll tax wedge cut permanent?

The payroll tax wedge cut introduced in 2024 has been confirmed and made permanent by the 2025 Budget Law. In 2026, workers with incomes up to 35,000 euros continue to benefit from reduced contributions and, in some cases, an additional deduction, with a net payslip advantage ranging from approximately 60 to 100 euros per month.

How do you calculate the total cost of an employee for the company?

The cost for the company is approximately 40-45% more than the employee's gross annual salary. On a gross annual salary of 30,000 euros, the total annual company cost is approximately 42,000-43,500 euros, considering employer INPS contributions (approximately 30%), severance pay (TFR), INAIL insurance, and other ancillary charges.