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Italian Severance Pay (TFR) Calculator

Work out the TFR (trattamento di fine rapporto), Italy's severance accrual, and the net you actually receive, with the ISTAT revaluation and the separate taxation line by line.

Gross TFR accrued
€22,604.63
Estimated net TFR
€17,838.52

Each year sets aside €2,072.22, which is 6.91% of pay: the statute divides by 13.5 and then deducts the 0.50% contribution, rather than applying a flat 6.91%. At payout the separate-taxation rate is 23%, computed on the reference income and not on the 23% marginal rate of your payslip.

How the result is reached

Annual quota (pay ÷ 13.5)€2,222.22
Additional INPS contribution (0.50%)−€150.00
Annual amount set aside€2,072.22
Set aside over 10 years€20,722.20
Gross revaluation accrued€2,267.99
Substitute tax on the revaluation (17%)−€385.56
Gross TFR accrued€22,604.63
Reference income (base ÷ years × 12)€24,866.64
IRPEF under separate taxation (23%)−€4,766.11
Estimated net TFR€17,838.52

With at least 8 years of service with the same employer you may request an advance of up to 70% of the accrued amount, here €15,823.24, for extraordinary medical expenses or to buy a first home, once only during the employment (article 2120, comma 6 of the civil code).

The revaluation is 1.5% fixed plus 75% of the rise in the ISTAT FOI index over December of the previous year, applied to the fund held at the preceding 31 December: the current year's quota is not revalued. At 31 December 2025 the rate was 2.31% (FOI from 120.2 to 121.5). Careful: from January 2026 ISTAT publishes the FOI on base 2025 = 100, so dividing a 2026 index by the December 2025 one gives a meaningless answer.

This covers the TFR left with the employer. Amounts routed to a complementary pension scheme follow legislative decree 252/2005 rather than the separate taxation on this page, and still count towards the reference income that sets the rate.

An educational estimate based on article 2120 of the civil code and article 19 of the TUIR: it is not tax, financial or employment advice. The final net figure depends on the reassessment the Agenzia delle Entrate, Italy's tax agency, carries out on the average rate of the five preceding years.

1

The statute divides by 13.5; it does not multiply by 6.91%

Article 2120 of the Italian civil code says the TFR is calculated "sommando per ciascun anno di servizio una quota pari... all'importo della retribuzione dovuta per l'anno stesso divisa per 13,5", by summing for each year of service a share of the pay due for that year divided by 13.5. That division is 7.4074% of pay. The 6.91% you read almost everywhere comes from a second rule: article 3, comma 15 of law 297/1982 raises the employer's contributions by 0.30% from July 1982 and by "a further 0.20%" from January 1983, and comma 16 lets the employer deduct that contribution from the TFR quota. The 0.50% is written nowhere: it is the sum of two increments. On 30,000 euro a year the gross quota is 2,222.22 euro, the contribution 150 euro and the amount set aside 2,072.22 euro, which is 6.9074%. A flat 6.91% gives 2,073 euro: 78 cents a year, which compounds into tens of euro over a career.

2

The two bases are not the same base

The quota is computed on the pay that counts under article 2120, comma 3: "all sums, including the equivalent of benefits in kind, paid in connection with the employment, other than occasionally and excluding anything paid as an expense reimbursement". The 0.50%, by contrast, is computed on the "retribuzione imponibile", the social-security contribution base. They usually coincide, but they need not: comma 3 opens with "unless the collective agreement provides otherwise", so it is the CCNL, the sector agreement, that decides which pay items count towards the TFR, and it may exclude one that remains liable to contributions. When the two bases part company, 6.91% is no longer exact and two separate calculations are needed. In this calculator you enter the pay that counts towards the TFR, which is what your CCNL defines, not the gross on any single payslip.

3

The revaluation does not touch the current year's quota

Every 31 December the fund already set aside is revalued at a rate made of 1.5% fixed plus 75% of the rise in the ISTAT FOI consumer price index over December of the previous year. The detail that changes the number is in the first words of comma 4: the revaluation applies to the treatment "con esclusione della quota maturata nell'anno", excluding the quota accrued in the year. The quota just set aside is not revalued, and the revaluation runs "su base composta", on a compound basis, so ten years at 2.3% is not 23%. At 31 December 2025 the rate was 2.31%: the FOI went from 120.2 to 121.5, a rise of 1.0815%, of which 75% is 0.8111%, plus the fixed 1.5%. If the employment ends mid-year, comma 5 takes the 1.5% pro rata by month and the ISTAT rise measured in the month of termination.

4

In 2026 the ISTAT index changed base: mind the arithmetic

From January 2026 ISTAT publishes the FOI on base 2025 = 100: January 2026 reads 100.4 and August 2026 reads 103.7. December 2025, the index the year's revaluation starts from, is published on base 2015 = 100 and reads 121.5. Dividing 103.7 by 121.5 gives minus 14.7%, and 1.5% plus 75% of that becomes minus 9.5%: a shrinking fund, which is exactly what the statute does not contemplate. The change of base is invisible from the two numbers, because both are ISTAT FOI figures for the same country. For a 2026 calculation take two indices on the same base, from the linked series, or use the monthly coefficient ISTAT publishes directly. Here the rate is a field you fill in, precisely because it is the reading of a live series and not a constant.

5

Two different taxes, not one

The revaluation pays a 17% substitute tax every year under article 11, comma 3 of legislative decree 47/2000 (it was 11% up to the 2014 revaluations). Comma 4 adds the part that decides who bears it: "l'imposta è imputata a riduzione del fondo", the tax is charged against the fund. Your TFR therefore grows by the revaluation net of 17%, and the following year's revaluation is computed on that reduced figure. The amount set aside, instead, pays IRPEF once, at payout, under separate taxation: article 19 of the TUIR says the TFR is income "reduced by the revaluations already subject to the substitute tax", so the revaluation is not taxed twice. Two levies on two different parts of the same fund, at two rates and at two moments.

6

The rate is an average, and it annualises by twelve

Separate taxation does not apply the marginal rate on your payslip. Article 19, comma 1 builds a "reddito di riferimento", a reference income, by dividing the base by the years and fractions of a year of service and multiplying "per dodici", by twelve: twelve, not 13.5. Since the annual quota is one thirteenth-and-a-half of pay, annualising it by twelve produces about 88.9% of annual pay, and IRPEF on that figure gives the average rate. On 40,000 euro of pay the reference income is 33,155.52 euro: IRPEF on it is 8,141.32 euro, an average rate of 24.55%, while the marginal rate on that same income is 33%. A calculation done at the marginal rate overstates the tax by more than a third. Note that the length of service does not change the rate: dividing by the years and multiplying by twelve takes it out of the sum.

7

The payslip is not the last word: there is a reassessment

What the employer withholds at payout is not final. The same comma 1 continues: the tax offices "provvedono a riliquidare l'imposta in base all'aliquota media di tassazione dei cinque anni precedenti", reassess the tax on the average rate of the five preceding years, "iscrivendo a ruolo le maggiori imposte dovute ovvero rimborsando quelle spettanti", raising a demand for any extra tax due or refunding any overpaid. It runs both ways. Comma 1-bis adds that if there was no taxable income in one or more of those five years, the average is taken over the years that had income, and if none did, the first IRPEF bracket rate applies, 23% today. This calculator estimates the withholding at payout, the figure on the payslip; the reassessment needs five years of your own tax history.

8

The 309.87 euro per year is for something else

A reduction of 309.87 euro for each year of service circulates as though it applied to everyone. In the text of article 19 it sits in comma 2-bis, which is about "indennità equipollenti, comunque denominate", equivalent severance payments however named: public-sector buonuscite and the like, not the private-sector TFR. What the private TFR does have is in comma 1-ter, and it applies only to fixed-term contracts of effective duration not above two years: 61.97 euro less tax for each year, pro-rated by month for shorter periods and reduced proportionally for part-time. In the text in force the figure is written in lire, "lire 120 mila"; the text taking effect in 2027 writes it as 61.97 euro and confirms the conversion. Deducting 309.87 euro a year from an ordinary TFR understates the tax.

9

Pension fund and advances: two choices, two rules

If you route the TFR to a complementary pension scheme, those amounts leave this page: they follow legislative decree 252/2005 rather than the separate taxation of article 19. Mind one detail of comma 1, though: the reference income is computed on the base "aumentato delle somme destinate alle forme pensionistiche", increased by the amounts routed to pension schemes. Moving part of the TFR into a fund does not lower the rate on what stays with the employer. The advance is the other choice: comma 6 of article 2120 allows it after at least eight years of service with the same employer, up to 70% of the accrued amount, once only during the employment and for two grounds only: extraordinary medical expenses recognised by the public health structures, and the purchase of a first home for yourself or your children. The same rate applies to the advance, subject to adjustment at final payout (comma 4 of article 19).

10

The legal citation changes address on 1 January 2027

Almost every page on this subject cites article 19 of the TUIR. From 1 January 2027 that article is repealed by legislative decree 19 June 2026, no. 117 and its content becomes article 21 of the new consolidated text on income taxes, titled "Indennità di fine rapporto e di fine servizio". The substance does not change: the division by the years, the multiplication by twelve, the five-year average, the fixed-term reduction. The lire become euro and the cross-reference to legislative decree 124/1993 becomes one to 252/2005. On the same day article 241 of legislative decree 33/2025 repeals commi 3, 4 and 4-bis of article 11 of legislative decree 47/2000, the provision setting the 17% substitute tax. Both citations are here, with the date the handover takes effect.

Worked example

Example: 30,000 euro of annual pay counting towards the TFR, ten years of service, an average revaluation of 2.31% a year. The gross annual quota is 30,000 ÷ 13.5 = 2,222.22 euro, less 150 euro of additional contribution: 2,072.22 euro is set aside each year, which is 6.9074%. Over ten years that is 20,722.20 euro. The gross revaluation accrued is 2,269.12 euro, on which the 17% substitute tax takes 385.75 euro, leaving 1,883.37 euro in the fund. The gross TFR accrued is therefore 22,605.57 euro. The base for separate taxation is the amount set aside, 20,722.20 euro, and the reference income is 20,722.20 ÷ 10 × 12 = 24,866.64 euro: below 28,000 euro, so the average rate is 23%. IRPEF is 4,766.11 euro and you receive 17,839.46 euro. Together the two taxes take 22.41% of the fund before either of them. With ten years of service you could also request an advance of up to 15,823.90 euro, once only, for medical expenses or a first home.

Frequently asked questions

How is the Italian TFR calculated?
Divide the annual pay counting towards the TFR by 13.5 and deduct the 0.50% additional INPS contribution: on 30,000 euro a year that sets aside 2,072.22 euro. Every 31 December the fund already accumulated, excluding the current year's quota, is revalued by 1.5% plus 75% of the rise in the ISTAT FOI index. At the end of the employment the total is taxed separately.
Is the TFR rate 6.91% or 7.41%?
Both, at different stages. The statute sets aside pay divided by 13.5, which is 7.4074%, and the employer then deducts the 0.50% additional contribution: what stays in your fund is 6.9074%, rounded to 6.91%. The 6.91% appears in no statute; it is the difference between the two.
How is the TFR revaluation calculated?
The rate is 1.5% fixed plus 75% of the rise in the ISTAT FOI index over December of the previous year, applied to the fund held at the preceding 31 December: the quota set aside in the current year is not revalued. At 31 December 2025 the rate was 2.31%, with the FOI moving from 120.2 to 121.5.
Why does the 2026 TFR revaluation come out negative?
Because from January 2026 ISTAT publishes the FOI on base 2025 = 100 while December 2025 is published on base 2015 = 100. August 2026 reads 103.7 and December 2025 reads 121.5: dividing them suggests prices fell 14.7%. You need two indices on the same base, from the linked series, or the monthly coefficient ISTAT publishes.
How much tax is paid on the Italian TFR?
Two taxes on two different parts. The revaluation pays a 17% substitute tax each year, charged against the fund. The amount set aside pays IRPEF once at payout, under separate taxation, at the average rate computed on the reference income: on 30,000 euro of pay and ten years of service that is 23%.
Is the TFR taxed at my payslip rate?
No, and it is usually lower. Article 19 of the TUIR builds a reference income by dividing the base by the years of service and multiplying by twelve, then derives the average rate from it. On 40,000 euro of pay the reference income is 33,155.52 euro and the average rate 24.55%, while the marginal rate on that income is 33%.
Is the net TFR on my payslip final?
No. The Agenzia delle Entrate, Italy's tax agency, reassesses the tax on the average rate of the five preceding years and, in the statute's own words, raises a demand for the extra tax due "or" refunds what is owed: either a bill or a refund can follow. It needs five years of your tax history, so no calculator can anticipate it.
When can I request a TFR advance, and how much?
After at least eight years of service with the same employer, up to 70% of the accrued amount and once only during the employment. Two grounds are allowed: medical expenses for extraordinary treatment recognised by the public health structures, and the purchase of a first home for you or your children, documented by a notarial deed.
Does routing the TFR to a pension fund change the tax?
Yes: the amounts paid into the fund follow legislative decree 252/2005 rather than the separate taxation of article 19. But those sums still count towards the reference income that sets the rate, because comma 1 computes it on the base "increased by the amounts routed to pension schemes": you do not lower the rate on what stays with the employer.
Does the 309.87 euro per year allowance apply to the TFR?
Not to the private-sector TFR: those 309.87 euro sit in comma 2-bis of article 19 and concern indennità equipollenti, equivalent severance payments. The TFR has comma 1-ter, which reduces the tax by 61.97 euro per year only for fixed-term contracts of effective duration not above two years, pro-rated by month for shorter periods.
Is the TFR paid if I resign?
Yes. Article 2120 opens with "in ogni caso di cessazione del rapporto di lavoro subordinato", in every case of termination of employment, so resignation, dismissal, expiry of a fixed term and retirement all give the right to the accrued TFR. The Constitutional Court settled it as early as 1968, striking down the old rule that excluded voluntary resignation.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: