Top Personal Income Tax Rates in Europe, 2025
Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) levy the highest top personal income tax rates in Europe.
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As a nonpartisan, educational organization, the Tax Foundation has earned a reputation for independence and credibility. Our global tax policy team regularly provides accessible, data-driven insights, including a survey of corporate tax rates around the world, from sources such as the Organisation for Economic Co-Operation and Development (OECD), the European Commission, and others.
Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) levy the highest top personal income tax rates in Europe.
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More than 175 countries worldwide—including all major European countries—levy a value-added tax (VAT) on goods and services. EU Member States’ VAT rates vary across countries, though they’re somewhat harmonized by the EU.
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Some European countries have raised their statutory corporate rates over the past year, including Czechia, Estonia, Iceland, Lithuania, and Slovenia.
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The worldwide average statutory corporate tax rate has consistently decreased since 1980 but has leveled off in recent years. In the US, the 2017 Tax Cuts and Jobs Act brought the country’s statutory corporate income tax rate from the fourth highest in the world closer to the middle of the distribution.
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Developed countries raise tax revenue through individual income taxes, corporate income taxes, social insurance taxes, taxes on goods and services, and property taxes—the combination of which determines how distortionary or neutral a tax system is.
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To recover from the pandemic and put the global economy on a trajectory for growth, policymakers need to aim for more generous and permanent capital allowances. This will spur real investment and can also contribute to more environmentally friendly production across the globe.
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Governments often justify higher tax burdens with more extensive public services. However, the cost of these services can be more than half of an average worker’s salary.
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Before accounting for state and local sales taxes, the tax burden that a single average wage earner faces in the U.S. is 31.7 percent of pretax earnings, amounting to $18,198 in taxes in 2017.
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A higher tax burden on labor often leads to lower employment rates and wages. That’s important for policymakers to remember as they look for ways to help their economies recover from coronavirus-induced shutdowns. If their goal is to encourage employment, policies that lower the tax burden on labor could prove a powerful tool.
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Governments often justify higher tax burdens with more extensive public services. However, the cost of these services can be more than half of an average worker’s salary.
16 min read
To make the taxation of labor more efficient, policymakers should understand the inputs into the tax wedge, and taxpayers should understand how their tax burden funds government services.
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