OECD: Single Worker Tax Rates Highest Since 2016; Ireland Bucks Trend

Tax rates on wages for a typical single worker in rich countries have reached their highest level in almost a decade, according to OECD figures published Wednesday. In 2025, the total tax burden for a single worker without children earning an average national wage across 38 mostly industrialized OECD member countries was 35.1 per cent of employment costs, up from 34.9 per cent in 2024 and the highest since 2016. This includes employee and employer social security contributions, income tax, and subtracts cash benefits.

Ireland is an exception, with the personal average tax rate for a single worker without children falling by 3 per cent. It is one of only 13 OECD countries to see personal tax rates decrease, with only Australia, Latvia, and Italy experiencing more significant reductions. Gross wages in Ireland were 3.8 per cent higher last year than in 2024, meaning these workers were 1.8 per cent better off before tax, accounting for 2 per cent inflation.

The gap between employers’ labor costs and workers’ take-home pay, known as the tax wedge, increased in 24 of 38 OECD countries last year for a typical single worker, including Germany, Israel, and Estonia, with the UK recording the largest year-on-year rise. For most households, including those with children, the average tax wedge was at its highest level since before the Covid-19 pandemic. Alexander Pick, head of the OECD’s tax data unit, noted that employment taxes remain a focus as public finance strains compel countries to increase revenues.

Riccardo Marcelli Fabiani, an economist at Oxford Economics, stated that taxing labor is «easy» compared to taxing capital. Governments seek more fiscal space after pandemic spending, and now face higher defense needs and aging populations. The war in the Middle East is also expected to impact growth. The tax wedge for households with children increased more, on average, than for single workers. In Ireland, the tax wedge for a couple with children where both parents work is 25.7 per cent, below the OECD average of 29.8 per cent. For a one-earner family with two children, it increased by 0.46 percentage points to 26.2 per cent across OECD countries. European countries like Belgium (52.5 per cent), Germany (49.2 per cent), and France (47.2 per cent) show the highest employment taxation for single workers.