The tax wedge is income tax plus employee and employer contributions, minus cash benefits, as a share of total labour cost.
Sources: OECD Taxing Wages 2025, comparative indicators (single worker, no children; average wage as defined by the OECD for each country) and OECD, Non-tax compulsory payments as an additional burden on labour income in 2025 (Tables 5 and 6) for mandatory pension and insurance payments that are not classed as taxes, such as Australian superannuation. Model estimates: voluntary benefits, local caps and sector-specific schemes are not included.
Frequently asked questions
What is the tax wedge?
The gap between what the employer pays and what the employee takes home, as a % of labour cost.