Since 7 April 2026, Italy’s 7% flat tax for foreign pensioners reaches towns of up to 30,000 residents, up from 20,000. In Puglia that adds 18 towns to the map, Ostuni among them, and brings the total to 231 of the region’s 257 municipalities. Here is who qualifies, how the numbers work, and the full list, checked against ISTAT.
US citizens who take the 7% regime still file a US return every year; our guide to US taxes while living in Puglia explains how the IRS side works.
This is a general guide, not tax advice. Rules and population figures change; check the linked official pages and speak to a commercialista (accountant) before you move. For the full sequence of the move, from visa to residence registration, see moving to Puglia, step by step.
What changed in April 2026
The change comes from article 26 of Law no. 34 of 11 March 2026, Italy’s annual small business law (Legge annuale PMI), published in the Gazzetta Ufficiale on 23 March 2026. It rewrites one number in article 24-ter of the income tax code (TUIR): the population cap for towns in the southern regions goes from 20,000 to 30,000. The Agenzia delle Entrate, Italy’s tax agency, confirms the new limit applies from 7 April 2026.
Everything else stays the same: the 7% rate, the income it covers, the length of the option and the regions included. Anyone who opted in under the old 20,000 cap carries on as before.
Who qualifies
- You receive a pension paid by a foreign payer. Italian law sets no minimum amount.
- You were not tax resident in Italy in the five tax years before the year the option starts.
- You move from a country that has an administrative cooperation agreement on tax matters with Italy.
- You transfer your residence to Italy into an eligible town. The town where you first register on arrival is the one that counts, so settling in Bari or Lecce first and moving to a small town later does not work.
Nationality does not matter. Italian citizens who have lived abroad for at least five years can qualify on the same terms.
What it covers, and for how long
The 7% replaces ordinary income tax (IRPEF) on all foreign-source income, not only the pension: rents from a house back home, dividends, interest. Income produced in Italy is taxed in the normal way. The option runs for the year you move plus the following nine, so up to 10 tax years in all. The Agenzia delle Entrate describes these as the nine tax periods of validity of the option; ask your accountant to confirm your own start and end years.
You choose the regime in the Italian tax return for the year you move, and pay the 7% in one installment by the normal income tax deadline. No deductions or tax credits can be set against it. During the option you are also exempt from IVIE and IVAFE, the Italian taxes on foreign property and financial assets, and from the foreign asset reporting form. You can leave the regime at any time, but you cannot rejoin it.
Where it applies
Towns of up to 30,000 residents in eight southern regions: Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily. The same 30,000 cap applies to towns hit by the L’Aquila earthquake of 6 April 2009 and to the towns listed in annexes 1, 2 and 2-bis of Decree-Law 189/2016, after the 2016 earthquakes in central Italy (parts of Lazio, Marche, Umbria and Abruzzo).
Population is the ISTAT figure for 1 January of the year before your first year under the regime. A move in 2026 uses the 1 January 2025 figure. Once you qualify, that figure holds for the whole option, even if the town grows. You can move to another eligible town from the second year onward and keep the regime.
The 18 Puglia towns added in 2026
These towns had between 20,001 and 30,000 residents on 1 January 2025, the figure that applies to a move in 2026. Source: ISTAT, resident population on 1 January 2025, our own calculation from the official file.
| Town | Province | Residents, 1 Jan 2025 |
|---|---|---|
| Canosa di Puglia | Barletta-Andria-Trani | 27,507 |
| Conversano | Bari | 25,938 |
| Copertino | Lecce | 22,827 |
| Galatina | Lecce | 25,319 |
| Ginosa | Taranto | 21,717 |
| Gioia del Colle | Bari | 26,465 |
| Manduria | Taranto | 29,665 |
| Mesagne | Brindisi | 25,921 |
| Mola di Bari | Bari | 24,245 |
| Noicattaro | Bari | 25,902 |
| Ostuni | Brindisi | 29,943 |
| Palo del Colle | Bari | 20,366 |
| Putignano | Bari | 25,718 |
| Ruvo di Puglia | Bari | 24,254 |
| San Giovanni Rotondo | Foggia | 26,249 |
| Santeramo in Colle | Bari | 25,648 |
| Terlizzi | Bari | 25,982 |
| Triggiano | Bari | 25,764 |
A few of these sit very close to the line. Ostuni had 29,943 residents, so 57 more people would have pushed it out. Manduria had 29,665. For a move in 2027 the 1 January 2026 figure will apply, and ISTAT’s provisional estimate puts Grottaglie (30,198 in 2025) at 29,976, which would bring it in. Check the final figure before you sign a lease.
The 26 Puglia towns that do not qualify
Every other Puglia municipality, 231 in total, is under the cap. These are the ones over 30,000 residents on 1 January 2025, so they are out for a 2026 move:
Altamura (70,163), Andria (96,750), Bari (315,831), Barletta (92,191), Bisceglie (53,404), Bitonto (52,958), Brindisi (81,723), Cerignola (56,900), Corato (46,938), Fasano (38,863), Foggia (145,198), Francavilla Fontana (34,550), Gravina in Puglia (42,146), Grottaglie (30,198), Lecce (94,187), Lucera (30,591), Manfredonia (53,391), Martina Franca (46,754), Massafra (31,845), Modugno (36,038), Molfetta (57,229), Monopoli (47,757), Nardò (30,752), San Severo (49,136), Taranto (186,011), Trani (54,803).
Several favorites are on this list, notably Monopoli, Martina Franca, Fasano and Lecce. Others well loved by newcomers are comfortably eligible: Polignano a Mare (17,353), Gallipoli (18,934), Ceglie Messapica (18,502), Locorotondo (13,859), Cisternino (11,040), Alberobello (10,102) and Otranto (5,566).
Choosing a town to retire in
The tax list is only the start. Before you pick a town, check three practical things: how far you would be from a hospital with an emergency department (see our guides to hospitals in Puglia, emergency care in Salento and emergency care in the Valle d’Itria), how you would reach Bari or Brindisi airport for flights home, and what a month would cost (our cost-of-living budget for a couple works through the numbers). Remember that the town where you first register is the one that counts.
Choosing among the new towns
We drove up to Ostuni on a weekday in October, and the old town was quiet in the way working towns are, the bars full of locals rather than tour groups. That is the real change in 2026: the new towns are proper market and hospital towns rather than villages.
Ostuni
The white hill town above the olive groves between Brindisi and the Valle d’Itria. It is the best-known name on the new list.
Conversano and Putignano
Two inland towns southeast of Bari, both with full services and a short drive to the coast at Polignano and Monopoli.
Galatina and Copertino
Salento towns near Lecce. Galatina has a hospital and a fine Romanesque-Gothic basilica, Santa Caterina d’Alessandria.
Before you choose, look at healthcare: our guide to public and private hospitals in Puglia covers where the main ERs are. For running costs, see our cost of living in Puglia.
A worked example in euros
Take a retired couple where one spouse has a foreign pension of €40,000 a year and €5,000 of rent from a property abroad, €45,000 of foreign income in all. These are illustrative 2026 figures for one person; tax treaties and personal details change the real result.
| 7% regime | Ordinary IRPEF | |
|---|---|---|
| Foreign income | €45,000 | €45,000 |
| Tax rate | 7% flat | 23% to €28,000, 33% to €50,000 |
| Tax before credits | €3,150 | €12,050 |
| Regional and town surcharges | None | Extra, set locally |
Under the ordinary rules, the €12,050 is gross IRPEF before deductions and before any credit for tax paid abroad, using the 2026 brackets (the middle rate fell from 35% to 33% this year). Credits for foreign tax can narrow the gap a lot, which is why the regime suits some pensions far better than others. A spouse with their own foreign pension makes their own choice and pays their own 7%.
If you are a US citizen
The 7% flat tax does not beat staying in the US. The US taxes its citizens wherever they live and credits Italian tax against US tax (IRS Publication 54; Form 1116), so your total bill cannot fall below the US level. What the 7% does is stop Italy charging its ordinary rates of 23% to 43% plus surcharges on top. That matters most for income from a 401(k), an IRA or a private pension.
We ran €100,000 of private pension income ($111,930 at the ECB rate of 23 October 2026) for a single US citizen aged 65 or over. In the US we applied the 2026 brackets, the $16,100 standard deduction and the $2,050 addition for age 65 (Rev. Proc. 2025-32), plus the $6,000 senior deduction, which shrinks by 6% of income above $75,000 and is $3,784 here (IRS). No FICA is due on pensions, and Italy charges no INPS on them. In Lecce we applied IRPEF, the Puglia surcharge and the Lecce surcharge. In a 7% town the substitute tax replaces IRPEF and both surcharges.
Cite this: Puglia Everyday research, “Who keeps what of a €100,000 pension”, October 2026, pugliaeveryday.com/moving-to-italy/the-best-towns-7-puglia-town-to-retire-in-italy/ · Download the data (CSV)
Finding: on a €100,000 pension, a single US retiree keeps €87,036 in the US, €60,860 in Lecce at ordinary Italian rates and €87,036 in a 7% town. The 7% saves €26,176 against ordinary Italian tax but nothing against staying in the US: the IRS collects the difference (€5,964). Puglia Everyday analysis.
| €100,000 private pension | US retiree in the US | US retiree in Lecce, ordinary rates | US retiree in a 7% town |
|---|---|---|---|
| IRPEF | – | €35,200 | – |
| Puglia regional surcharge | – | €2,852 | – |
| Lecce municipal surcharge | – | €1,088 | – |
| 7% substitute tax | – | – | €7,000 |
| US federal income tax | €12,964 | €0 after credit | €5,964 after credit |
| INPS / FICA | not due on pensions | not due on pensions | not due on pensions |
| Left over | €87,036 | €60,860 | €87,036 |
Social Security: under article 18(2) of the US-Italy treaty, US Social Security paid to an Italian resident is taxable only in Italy, so it counts as foreign pension income under the 7%. The US still taxes its own citizens through the treaty’s saving clause (art. 1(2)), unless you are also an Italian national (Protocol, art. 1(2)(a)). Private pensions follow article 18(1): taxable in the country where you live, again subject to the US saving clause.
Which towns: since 7 April 2026 the regime covers towns of up to 30,000 residents in Puglia and seven other southern regions, up from 20,000 (Law no. 34/2026, art. 26; Agenzia delle Entrate). The count is the ISTAT population on 1 January of the year before your first year under the regime, and it stays fixed even if the town later grows, as long as you do not move. You must not have been tax resident in Italy in the previous five years, the pension must be paid from abroad, and the option lasts nine tax years.
Check with a preparer whether the IRS accepts the 7% substitute tax as a creditable foreign tax. We found no IRS ruling on it (IRS Publication 514 sets the general tests). If it is not credited, the US takes its full €12,964 and the 7% town leaves €80,036. For FBAR and the rest of the US side, see our guide to US taxes for Americans living in Puglia.
Sources for this research
- Agenzia delle Entrate, “Regime opzionale per i pensionati esteri: che cos’è” (30,000-resident limit from 7 April 2026). https://www.agenziaentrate.gov.it/portale/schede/agevolazioni/regime-opzionale-per-i-pensionati…
- Gazzetta Ufficiale, Law no. 34 of 11 March 2026, art. 26. https://www.gazzettaufficiale.it/eli/id/2026/03/23/26G00050/sg
- ISTAT, resident population by municipality. https://demo.istat.it/app/?i=POS&l=it
- Agenzia delle Entrate, “Aliquote e calcolo dell’Irpef” (2026 brackets). https://www.agenziaentrate.gov.it/portale/imposta-sul-reddito-delle-persone-fisiche-irpef-/aliq…
- Regione Puglia, “Addizionale regionale Irpef: aliquote” (2026). https://www.regione.puglia.it/web/tributi/addizionale-regionale-irpef/aliquote
- MEF, Dipartimento Finanze, municipal Irpef surcharge, Lecce (2025 rates, resolution no. 184/2022). https://www1.finanze.gov.it/finanze2/dipartimentopolitichefiscali/fiscalitalocale/nuova_addcomi…
- US Treasury, US-Italy income tax convention and protocol (1999), art. 1(2), art. 18 and art. 23. https://home.treasury.gov/system/files/131/Treaty-Italy-8-24-1999.pdf
- IRS, Revenue Procedure 2025-32 (2026 brackets, standard deduction, age-65 addition). https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- IRS, Fact Sheet FS-2025-03, “Tax deductions for working Americans and seniors” (14 July 2025). https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-an…
- IRS, Publication 514, Foreign Tax Credit for Individuals. https://www.irs.gov/publications/p514
- IRS, “About Form 1116, Foreign Tax Credit”. https://www.irs.gov/forms-pubs/about-form-1116
- IRS, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. https://www.irs.gov/publications/p54
- European Central Bank, euro reference rates, US dollar (23 October 2026: 1.1193). https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/eu…
What people get wrong on Reddit
In April, a thread on r/ItalyExpat titled “7% Tax Regime Change to 30k” asked whether the new cap was real. It is: Law 34/2026, article 26, confirmed by the Agenzia delle Entrate. Other mix-ups come up again and again:
- Relatives already living in northern Italy asking whether they can now move south and opt in. They cannot, because they were tax resident in Italy within the last five years.
- Thinking the 7% only covers the pension. It covers all foreign income, and nothing earned in Italy.
- Registering first in a big city to sort out paperwork. The first town of residence has to be eligible.
- Using an old list. Guides written before April 2026 still stop at 20,000 residents, and many use the wrong ISTAT year.
- Treating it as a visa. The regime is only a tax choice; non-EU citizens still need a visa, usually the elective residence visa.
FAQ
Which Puglia towns qualify for the 7% tax?
Since 7 April 2026, towns in the southern regions with up to 30,000 residents are eligible, up from 20,000. The lists above show the 18 Puglia towns added this year and the 26 that do not qualify.
Is Ostuni a 7% town?
Yes, for a move in 2026. It had 29,943 residents on 1 January 2025, under the new 30,000 cap.
Do I need a big pension?
The law sets no minimum. The pension must be paid by a foreign payer, and the visa you need may have its own income requirement.
How long does the 7% last?
The year you move plus the following nine, up to 10 tax years, as long as you stay resident in an eligible town.
Can I move house within Italy?
Yes, from the second year, as long as the new town is also eligible. Moving to a larger town or leaving Italy ends the regime.
What if my town grows past 30,000?
Nothing changes for you. The population figure used when you opted in applies for the whole period.
Does it apply to income from Italy?
No. Italian income is taxed in the ordinary way. If you also have work or business income, our guide to the impatriate workers tax scheme covers a different regime.
Non-EU retirees with capital to invest can also look at the Italy golden visa.
Part of our tax guide: Taxes in Italy for foreigners, every guide we publish on Italian taxes, with a section for Americans, in one place.
