My wife and I are renting a car at Milan Malpensa, Italy (MXP) from Budget for 7 days.
We will both be driving.
Is an international drivers license for both of us necessary?
It would cost $40 at AAA, that might be worth it for the peace of mind.

If you are both driving then yes you both need an IDP. It is a legal requirement in Italy.

Yes, each of you needs an IDP.

And to clarify -- it is an International Drivers License Permit. It is not a license and must be accompanied by your official license from home.

What's the difference between a 'license' and a 'permit'?

Yes it is simply a recognized translation of your license into many languages.

It is called an IDP, international drivers permit, You buy it from the AAA or AATA in the US, or a post office in the UK.
You do not buy it as a International drivers licence from some online seller or other source - that will not be official ratified permits.
There are actually three, depending on which treaty the country you are visiting has ratified, and UK drivers may need all three depending on where they are driving if there is a no deal brexit.
I believe the IDP issued by the AAA covers all three treaties.
You must carry your own driving licence in addition to the IDP.

https://www.consumer.ftc.gov/article...-license-scams

Apparently some state licenses are now being issued using an international format as I assume European countries use or do the French say need an International Drivers Permit to drive in other European countries?

You need a translation of the licence. Only EU licences are recognised by EU countries without the need of an IDP. Hence Britons needing them should they fall off the cliff in a month, even though most will have EU standard licences.

To me, spending the money for an IDP is a no-brainer, as I am not willing to face being turned away from a car rental agency or facing the fine for NOT having one if called to produce it while in a car. Your trip, your money, your call.

Permit comes from a French translation of their word for license, and the terms International Driving Permit are translated from their original French into English. So in this instance there is no difference between license and permit. "Permis" can be translated as permit or license, translator's choice. In US English, the permit in driving permit of course means another thing entirely from driving license.


Edit: I'm not saying that the IDP is not a stand alone license, it's not.

This is the critical case to consider.

FWIW: Some US licenses, including Colorado and Minnesota, now follow the Vienna format of the IDP with numbered fields and in a certain order. So maybe these licenses will be better received, but who knows.

This is a never ending debate. We have booked cars through most rental car agencies. None have ever asked for our IDP. We are told that police in some countries, including Italy, CAN ask for them and CAN fine you if you don’t have one. Our son also has booked just as many cars, and he has been stopped by the police (I think in Slovakia) and no one cared that he has never had an IDP. He still travels without one. I have done it both ways and fortunately have never been stopped by the police. Having said that, last fall on a quiet day in Sestri Levante, we spotted two police officers stopping a senior American couple for some sort of traffic violation. One officer stood adjacent to the driver’s door with one of those really big and long guns at his side. It was very intimidating, at least for us. In the hatchback of the police car, there was a computer and the second officer, holding the driver’s IDP, was inputting the data from it. That was when I got my “aha moment” to always make sure I have mine as a little extra insurance policy.

We drove in Italy we had an international drivers licence. We were never asked for it.
But I prefer to have it than not have it...

I figure it's like locking the car. It doesn't matter, until the one time it does matter. And then it really matters. Not sure what your position would be in the event of an accident WRT insurance..

We are going to AAA Monday to get the IDP. We have rented cars in Europe many times before and never needed one, but like it has been said, its insurance.

What people fail to realize is that you are hardly ever going to be asked to show the IDP by a car rental agency, so people take this to mean "we didn't need one." Dumb. You DO need one. Italian law and French law require that you have one. Period.

You can substitute an official translation of your US license, but at $60 an hour for translation and the need to procure a translator from the official list of government-approved translators, it's a no-brainer to go to AAA.

I just now checked for driving in France, and what I wrote in the earlier post is correct. If you don’t have an IDP you will need a notarised translation into French, so you may as well get an IDP.
https://franceintheus.org/spip.php?article376

About a year ago on the Rick Steves' site a poster who did not have the IDP had a minor fender scrape while driving in Italy and the police were involved. His rental car was impounded because there was no one with a legal driving permit who could drive the vehicle from the accident scene. He, of course, was livid because the rental agency did not tell him that an IDP was needed. There was also a recent posting where someone in Italy was denied a rental car pick up for lack of the IDP. Always amazed at people who post that they have driven in Europe for decades without a IDP. Proves absolutely nothing. It is a legal requirement but you can choice to do what you want to do. In past 20 years or so in the US, I haven't had to show my local driver's license to the police so I guess I don't really need one.

My American brother-in-law was certainly asked for his IDP by the rental company when we rented a car in Spain.We were also told to always carry our passports when we were driving.
Are you feeling lucky?