RAL vs net salary: the difference
In Italy, the RAL (Retribuzione Annua Lorda, annual gross salary) is the total contractual pay before any deductions. The monthly net salary is what your employer actually pays after deducting the employee's social security contributions (INPS) and income tax (IRPEF).
Step 1: social security contributions
The first deduction concerns the employee's INPS contributions, which amount to approximately 9.19% of the RAL (with some variations by category). These contributions are paid by the employer on behalf of the employee and build the future pension.
Step 2: the IRPEF taxable base
Subtracting the social security contributions from the RAL gives the IRPEF taxable income. The progressive tax rates for 2025 are:
- Up to €28,000: 23%
- From €28,001 to €50,000: 35%
- Above €50,000: 43%
Step 3: employment deductions
The gross IRPEF is reduced by employment deductions, which are inversely proportional to income: the higher the income, the lower the deduction. The theoretical maximum deduction is €1,955 and it reduces to zero at approximately €50,000 of income. Additional deductions apply for dependent family members.
Practical example: RAL €30,000
RAL €30,000 → INPS contributions ≈ €2,757 → IRPEF taxable base ≈ €27,243 → Gross IRPEF ≈ €6,266 → Employment deduction ≈ €680 → Net IRPEF ≈ €5,586 → Annual net salary ≈ €21,657 → Monthly net salary ≈ €1,804. The average tax rate is 27.8% on the RAL.