Taxes on wages hit decade high across OECD countries but Ireland bucks trend Governments across the Organisation for Economic Co-operation and Development (OECD) are increasingly relying on labour income as a source of revenue, pushing the tax burden on workers to its highest level in nearly a decade. However, Ireland stands out as an exception, recording a decline in personal income tax for single workers without children. According to the OECD’s annual Taxing Wages report, the average tax wedge – which includes income tax and employee and employer social security contributions, less any family benefits – for a single worker earning the national average wage reached 35.1 per cent across the 38 member countries in 2025. This marks an increase from 34.9 per cent in 2024 and the highest level since 2016. The tax wedge rose in 24 of the 38 OECD countries last year, reflecting a broader trend of governments turning to labour income as a relatively accessible revenue stream. Ireland, however, bucked this trend. The report found that the personal average tax rate for a single worker without children in Ireland fell by 3 per cent. Ireland was one of only 13 OECD countries to record a decrease in personal income tax rates, with only Australia, Latvia and Italy reporting larger reductions. The decline occurred despite gross wages in Ireland rising by 3.8 per cent compared to 2024. After adjusting for 2 per cent inflation, this translated to a 1.8 per cent increase in pre-tax earnings for the average single worker without children. The OECD has been a long-standing partner of Ireland, which was one of the 20 founding members to sign the Organisation’s Convention in 1960. Today, Ireland remains one of 38 OECD members, benefiting from shared policy expertise and contributing its own experience to the development of international standards. While the rise in the tax burden across most OECD countries raises concerns about potential impacts on work incentives and hiring decisions, Ireland’s divergence highlights the variability in national tax policies even among economically similar nations. The data underscores how fiscal choices at the national level can significantly influence take-home pay, even amid broader international trends.
16