This report provides details of taxes paid on wages in OECD countries. It focuses on the decomposition of personal income taxes and the role of tax reliefs, which can take the form of tax allowances or tax credits on the taxes levied by different levels of government. It finds that post-tax incomes increased in almost three-quarters of OECD countries in 2024, as real wages recovered and labour taxes increased slightly.

The tax wedge is the primary indicator presented in this report. It measures the difference between the labour costs to the employer and the corresponding net take-home pay of the employee. The report provides cross-country comparison of the labour tax wedge. It looks at eight stylised household types, which vary by income level and household composition.

Key findings

• The average tax wedge for a single worker earning the average wage increased in a majority of countries in 2024.
• Higher social security contributions were the most common factor behind the increases in the tax wedge in 2024.
• The tax wedge for most household types with children fell in a majority of countries in 2024.
• Tax credits and allowances significantly reduce tax rates across household types, especially for households with children.
• Average wages and post-tax incomes recovered in real terms across the OECD.