This country-specific summary for Australia is based on the results shown in the OECD Taxing wages 2026 report. It focuses on two of the eight household types examined in the report: a single worker earning the average wage and a one-earner married couple at the average wage level with two children. The summary presents effective tax rates on labour in Australia and compares these with rates in other OECD member countries as well as the OECD average, while also highlighting changes in rates from the previous year. 

The tax wedge is a measure of the tax on labour income, which includes the tax paid by both the employee and the employer. In Australia, income tax and employer payroll taxes (which are included as employer social security contributions) combine to account for the entire tax wedge.

Key findings

• Australia had the 11th lowest tax wedge in the OECD for an average married worker with two children at 21% in 2025, which compares with the OECD average of 26%.
• Between 2015 and 2025, the tax wedge for the average single worker in Australia decreased by 0.4 percentage points.
• In Australia, the average single worker faced a net average tax rate of 23% in 2025 (14th lowest among OECD countries), compared with the OECD average of 25%.