Will I need to use cash in Italy? Credit cards/Pay by phone for everything?

Yes it's the same. You can use card or your phone everywhere

99% of the time you will use your credit card or Apple/Google pay. You may need some cash if buying a €2 gelato or the taxi driver declares that the credit card machine is "broken."

We hardly used cash in Italy. We bought snacks like roasted chestnuts from street vendors and did buy a few items with cash, but it's like the US now. On our latest trip to Austria and Slovenia, we used our chipped card to touch to pay almost all the time.

I suggest maybe 100 euro or so. We order euros from our bank and it arrives in a few days.

Or if you need coins to access some of the public restrooms.
We pay for small purchases - coffee, gelato, small-fee museum or church entries, single-ride paper transit tickets, etc. - with cash so that we have coins and some smaller bills on us. I always have some small bills/coin on me that I can get to without letting on where on my person i've stashed larger amounts of cash and my cards. You never know who might be watching.

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With maybe the exception of Germany a few years back

Well, I would say Germany still. Things moved quickly towards contactless during the pandemic, but Germany has slid back into it's cash first mode pretty quickly, especially among the locals.

Perfect- Thank you all! I'm posting some other questions separately. Thanks in advance!!

We booked a car from FCO to our hotel & were specifically told the driver would only take cash. 65 euros. Same going back to airport, and we found taxi drivers preferred cash & one got very grumpy when we tried to pay with Apple Pay. I found Rome to be slightly behind Northern Europe in terms of being cashless.
AND you need 1 Euro coins to light up the paintings you want to see in churches!

I would recommend to get some cash at ATM machines at banks after you arrive. ATMs work the same as here. Just make one large withdrawal instead of many small ones as many US banks charge as much as $5 for each ATM transaction made overseas.

Digital payments are widely accepted but there are times when some hard cash is necessary or more convenient, especially for small purchases (like a €1.20 cup of espresso). Occasionally the taxi drivers (the biggest tax dodgers in Italy) will tell you their POS machine is 'broken' (wink wink) and therefore they can only accept hard cash (which is untraceable by tax authorities). Taxi drivers are probably the only occasions when you may have to use cash for amounts over a couple of euro. If you don't want to pay cash, make sure you make it known to the taxi driver that you don't have hard cash with you before you board.

You may also need cash for tips in restaurants and to feed light meters to illuminate church frescoes and mosaics.

I am in Rome now and you can use your credit card for everything. I only have 20 Euros and I used some for a gelato for my granddaughter and bought some bananas and apples at a small grocery store. You can always pick up more Eiros at an ATM at a bank. It’s so easy. But credit cards are used by far the most like someone else replied in the States. The weather is gorgeous here! It’s been in the mid 60’s and will hit 70 today and tomorrow.