Income Taxes Across Nations
With the tax filing deadline this week, we thought it might be interesting to share how tax rates in America compare to other nations.
We want to share two measurements using data from the 38 mostly-developed nations. The first is a comparison of federal income tax rates and the second is how much taxes make up a country’s economy.
Most nations have variable rates for income level, marital status, and number of dependent children; a non-married person with no children generally pays the highest rate. The first chart illustrates the range of income taxes by country. It includes the equivalent Social Security contributions and excludes cash benefits like earned income credit.
Income tax plus employee and employer contributions less cash benefits, 2024
As % of labour costs, by household type
The US ranks 27th out of the 38 OECD countries in average income tax burden.
The second chart is from the non-profit, the Tax Policy Center, also using data from the OECD. It shows how much taxes make up of a nation’s economy, as represented by Gross Domestic Product (GDP).
The tax-to-GDP ratio reflects the government’s footprint in the economy. Relative to most of the other nations in the OECD, the US’s 27% is below the average of 34%.
The US doesn’t have the lowest tax rate but it is below the average for peers and the government’s role in the economy is also less than the average. Something to ponder when we write those checks!
(Note: While we recognize that tax codes change yearly, we view this analysis as useful overall as a global comparison.)