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Personal Tax Rates by Country

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Personal Tax Rates by Country

Personal income tax is one of the oldest forms of taxation. Practically every national and provincial government levies taxes on the income of citizens and businesses that generate money within its borders. In the late 1900s and early 2000s, many developed nations reduced their dependency on personal income tax for financing, although none have completely abolished the tax.

“There has, for instance, been a widely perceived need to provide a fiscal environment that encourages investment, risk-taking and entrepreneurship; and provides improved work incentives,” according to an OECD publication. The principle of the personal income tax reforms has been partially based on the idea that lowering taxes may actually increase total tax revenue over time, as the extra income available to citizens can be used to start businesses and other ventures that can provide additional tax revenue.

International Tax Rates

The following chart is a comparison of tax rates around the world from the current member nations of the Organization for Economic Cooperation and Development (OECD). These rates apply only to taxes levied by the central national government. The amounts do not reflect additional local income taxes that may be levied by state or provincial governments.

OECD Comparison of 2010 Personal Tax Rates by Country and Average Tax Rate of Average Wage (AW) Individual

CountryMax Marginal Tax Rate (1)"All-in" Average Tax Rate at AW (2)
Australia4521.6
Austria5033.1
Belgium5042.1
Canada2922.2
Chile407
Czech Republic1522.5
Denmark18.6738.6
Estonia2119.4
Finland3029.1
France4027.8
Germany4539.2
Greece4518.8
Hungary3231.2
Iceland3325.3
Ireland4121.8
Israel4516.5
Italy4329.8
Japan4020.8
Korea3511.9
Luxembourg3826.4
Mexico305.6
Netherlands5231.9
New Zealand35.516.9
Norway24.5528.7
Poland3224.6
Portugal45.8822.9
Slovak Rep.1921.5
Slovenia4133.1
Spain27.1321.6
Sweden2524.7
Switzerland13.216
Turkey3527.1
U.K.5025.5
United States3522.9



Information for this table was collected from publications available through the OECD Tax Database in the “Personal income tax rates” section.

  1. What is Marginal Tax Rate? According to the Concise Encyclopedia of Economics, marginal tax rate is “the rate on the last dollar of income earned.” Basically, it is the maximum rate that can apply to a single person’s income. Some countries, like Estonia, institute a flat tax on people and businesses regardless of income. However, most countries levy a tax rate that increases with the income of the taxpayer up to a maximum (marginal) rate.
  2. What is ‘All-in’ Average Tax Rate at AW? Average wage (AW) as the average annual gross wage earnings of adult, full-time workers. The ‘All-in’ average rate is the comprehensive rate paid in income-based taxes, including provincial (or state) taxes and social security contributions2. The ‘All-in’ average rate at AW is the total rate of all income-based taxes paid by average wage households. The rates listed in the column in the table above only apply to single, childless adults. Married couples with or without children and single parents usually have lower average tax rates.

Additional Information about Personal Taxation Around The World

Different countries have different laws regulating the collection and calculation of personal income taxes. Personal income taxes are only one of several taxes that taxpayers in most developed nations are required to pay. Other common types of taxes include property tax and consumption taxes. To learn more about local and federal taxation, and the difference between flat and variable income tax, read our article on Understanding Different Types of Taxation.

About Quentin


Quentin is a freelance journalist, researcher and copy writer. His published compositions include feature journalism, for print and online outlets, as well as research-driven articles and e-books.

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Quentin

Quentin is a freelance journalist, researcher and copy writer. His published compositions include feature journalism, for print and online outlets, as well as research-driven articles and e-books.

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Personal Tax Rates by Country