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Global hiring costs

Tax wedge comparison

Quick answer: The tax wedge is the share of total labour cost taken by income tax plus employee and employer social security contributions, as defined by the OECD Taxing Wages report. It shows how much of what an employer pays never reaches the worker. This page compares the wedge across OECD countries at the average wage.

New: the full OECD tax wedge 2025 ranking for all 38 countries, with a downloadable CSV.

Where do these numbers come from?

Checked Oct 23, 2026. OECD Taxing Wages 2026 puts Germany’s 2025 average wage at €66,700 with employer social security at 20.86% of gross. €66,700 + 20.86% (€13,917) = €80,617, the total this calculator shows. Our automated tests repeat this comparison against OECD’s published net pay at 100% and 167% of the average wage for all 38 OECD countries.

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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 2026, 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.