"The tax wedge for a single worker earning the average wage increased in 24 out of 38 OECD countries, fell in 11 and was unchanged in 3. Across the OECD, the tax wedge for this household type ranged from 0% in Colombia to 52.5% in Belgium in 2025 and averaged 35.1% of labour costs, an increase of 0.15 percentage points from the previous year."
"The tax wedge for a single-earner household with two children at the average wage level increased by 0.46 percentage points on average across the OECD in 2025, reaching 26.2%, with increases in 22 countries. The larger increase for this household type implies that the fiscal advantage for working families in the OECD narrowed by 0.31 percentage points in 2025."
"This year's report includes a special feature on the statutory progressivity of labour taxation in OECD countries, showing the extent to which effective tax rates vary across income levels and household types. Across the OECD, labour tax systems tend to be most progressive for households at lower earnings levels and with children."
In 2025, effective tax rates on labour income rose across OECD countries, especially for households with children. The tax wedge, which reflects total taxes on labour minus cash benefits, increased for all household types, reaching its highest level since 2018. A single worker's tax wedge rose in 24 out of 38 countries, averaging 35.1%. For single-earner households with two children, the tax wedge increased to 26.2%. Despite higher tax rates, real wages rose in 35 countries, and post-tax income increased for single workers in 28 countries.
Read at London Business News | Londonlovesbusiness.com
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