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

Country	Max Marginal Tax Rate (1)	"All-in" Average Tax Rate at AW (2)
Australia	45	21.6
Austria	50	33.1
Belgium	50	42.1
Canada	29	22.2
Chile	40	7
Czech Republic	15	22.5
Denmark	18.67	38.6
Estonia	21	19.4
Finland	30	29.1
France	40	27.8
Germany	45	39.2
Greece	45	18.8
Hungary	32	31.2
Iceland	33	25.3
Ireland	41	21.8
Israel	45	16.5
Italy	43	29.8
Japan	40	20.8
Korea	35	11.9
Luxembourg	38	26.4
Mexico	30	5.6
Netherlands	52	31.9
New Zealand	35.5	16.9
Norway	24.55	28.7
Poland	32	24.6
Portugal	45.88	22.9
Slovak Rep.	19	21.5
Slovenia	41	33.1
Spain	27.13	21.6
Sweden	25	24.7
Switzerland	13.2	16
Turkey	35	27.1
U.K.	50	25.5
United States	35	22.9

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.