Countries with the Highest Single and Family Income Tax Rates

Reviewed by Lea D. UraduFact checked by Yarilet PerezReviewed by Lea D. UraduFact checked by Yarilet Perez

If you could live anywhere in the world, wouldn’t you want to know the potential income taxes before moving and how that compared to the U.S. tax rates? Perhaps, but that’s not the only question to ask. Your filing status of single or married is also a factor in determining which locations might have the highest income taxes. What’s more, the countries with the highest taxes on high incomes—Slovenia, Belgium, Sweden, Finland, and Portugal—are mostly different from the countries with the highest taxes on average income earners.

Being married with children also can make a difference. Denmark has some of the highest taxes in the world on both single and married taxpayers, as do Belgium and Lithuania.

This article focuses on the taxes you could expect, depending on whether you are single or married. This data (the most recent available from 2022) comes, in part, from the Organisation for Economic Co-operation and Development (OECD), a forum that allows governments from 38 advanced and developing countries around the world—26 of which are in Europe—to work together toward people’s economic and social well-being. Additional tax data for each country has been updated to 2024.

Key Takeaways

• Income tax burdens vary by country based on how much is paid into social insurance programs, as well as specifications such as age and homeowner status.
• There is a disparity between the highest and lowest income tax burdens among OECD countries—a list that skews heavily toward European countries.
• Different countries also put taxpayers into different brackets based on their income level, marital status, and number of dependents.
• Many European countries are offering expat tax incentives to reside in their country.
• Most countries have a double taxation treaty with the United States, ensuring you are not taxed twice on certain types of income.

Countries With the Highest Income Tax for Single People

Let’s look at the countries with the highest all-in average personal income tax rates at the average wage for a single person with no children. In 2022 (the latest figures available) the top five were Belgium (40.3%), Germany (38.0%), Lithuania (37.1%), Denmark (35.5%), and Slovenia (33.6%).

1. Belgium

Belgium’s top progressive tax rate is 50%. Income from property, work, investments, and miscellaneous sources is all taxable. Capital gains tax rates depend on the type of capital, with a top rate of 30%.

Employees pay a social security tax of 13.07% of their income. The government allows deductions for business expenses, social contributions, and 80% of alimony payments, and there is a personal allowance based on filing status. For 2024, the allowance is €10,570.

Expats in Belgium were given new rules in January 2024. Only those who have a minimum adjusted gross income (AGI) of €75,000 can benefit from the country’s special tax regime. There’s now a flat rate 30% deduction, capped at €90,000 for work-related expenses.

2. Germany

Germany has a progressive tax, which means that higher-income individuals pay more taxes than lower-income individuals. The country levies a progressive income and capital tax that caps out at 45%. Sources of taxable income include agriculture, forestry, business ownership, self-employment, savings and investments, rental property, capital gains, and other income. The first €801 in savings and investment income is not taxed, thanks to the saver’s allowance. There is a 25% withholding tax on interest and dividends and a 15% withholding tax on royalties.

Church tax in Germany is fully deductible, and the government allows for charitable contributions to be deducted as long as they are under 20% of the individual’s AGI. Church taxes are levied in many other European countries.

Income of up to €9,984 is considered a personal allowance and is not taxed. Other deductions include a percentage of contributions to a statutory pension insurance plan; health insurance premiums; private accident, life, unemployment, and disability insurance premiums; donations to registered charities.

3. Lithuania

Lithuania taxes its income earners at rates that top out at 32% for earnings over €114,162. Personal income tax until that AGI is 20%. Taxable income includes employment, commercial activities, royalties, leasing assets, and “other.”

Income unrelated to employment—including royalties, interest, and gains from the sale of property—is taxed at a rate of 15% or 20%, as are capital gains. Dividends are subject to a tax rate of 15%. There is no withholding tax charged on interest unless the individual in question isn’t a citizen of Lithuania, in which case the rate is 15%.

Lithuania seems to have given a huge break for certain earners, as the top income tax bracket was raised quite a bit. From 2024, that threshold is €114,162. All earnings over this amount are also subject to a lower social security tax of 6.98%.

4. Denmark

Denmark’s progressive income tax tops out at 52.07%. The Danes pay an 8% Danish labor market contribution tax, an average of 25.07% in municipal taxes, social security taxes of 1,188 kr. per year and capital gains taxes pegged to the normal personal income tax rate. There is an inheritance and gift tax rate, both 15%.

Employment income, bonuses, fringe benefits, business income, fees, pensions, annuities, social security benefits, dividends, interest, capital gains, and real estate rental income are all taxable. There is also a voluntary church tax of 0.65%.

Tax deductions are available for limited contributions to approved Danish pensions, unemployment insurance, charitable contributions, unreimbursed work travel, and double households. There is an expat scheme in Denmark, but considering it still requires payment of the labor tax, the rate for those who meet the special expat requirements is 32.84%.

5. Slovenia

Slovenia levies an individual income tax that ranges from 16% to 50%. Residents are taxed on their worldwide income, while non-residents will only have their Slovenia-sourced income taxed. Six types of income are subject to taxation: employment; business; agriculture and forestry; rent and royalties; dividends, interest, and capital gains; and “other” (for example, gifts, prize contest winnings). A withholding tax of 25% is levied against rental income.

The employee pays the lion’s share of pension and disability insurance at 15.50%. Health insurance is roughly equal between employer and employee, at 6.56% and 6.36%, respectively. Social security as a whole in Slovenia totals 22.10% for employees (16.10% for employers).

Capital gains, interest, and dividends are taxed at a flat rate of 25%.

How the U.S. Compares

The United States comes in at 24.8% in this category of average-earning singles with no children, giving it the 20th highest tax rate. The countries with the lowest all-in average personal income tax rates on single people with no children are Colombia (0%), Chile (7%), Costa Rica (10.5%).

Important

You might think a country’s high taxes are a valuable trade-off if you receive lots of social insurance benefits, your standard of living is high, and you think the government uses your tax dollars wisely.

Countries With the Highest Income Tax for Married People

For one-earner married families with two children, the countries with the highest average personal income taxes are different. Lithuania (37.1%), Denmark (31.9%) , and Belgium (28.9%) make the top five in both this category and the single-with-no-children category. Alongside those three countries, Finland (31.1%) and the Netherlands (27.4%) are in the top five.

1. Lithuania

Here is some information about taxation in Lithuania, in addition to the details in the taxes for single people section above. Residents are taxed on their worldwide income, while nonresidents are subject to a tax on their Lithuanian-sourced income and income from activities conducted through a fixed base in Lithuania. Residents of Lithuania are permitted an annual tax-exempt amount up to €4,800, which diminishes as their salary rises and is based on that amount minus 0.18x, where x is the annual income minus 12 monthly minimum wages of the current calendar year. Consumers also pay value-added taxes on most goods and services at a rate of 21%.

2. Denmark

Because we covered Denmark’s tax rates in the previous section, here is some additional information about taxation in Denmark. Residents pay taxes on worldwide income, and spouses must file separately. Capital gains on a home sale are normally tax-exempt. Most taxpayers get a personal allowance worth 49,700 kr. and an employment allowance. Individuals pay property taxes, and anyone other than a spouse who receives an inheritance pays an inheritance tax. Consumers also pay value-added taxes on most goods and services at a rate of 25%.

3. Finland

Finland taxes its income earners at progressive rates that top out at 44%. Residents pay taxes on worldwide income. Finland levies income tax on salaries, wages, pensions, and social benefits as well as capital income from investments. Earned income is subject to national taxes, municipal taxes, a public broadcasting tax, and church taxes, as well as contributions for social security.

4. Belgium

Belgium was covered in the section above, but here is additional detail on taxation for individuals. Residents pay taxes on worldwide income, with taxes at the federal, regional, and communal level. Tax rates are progressive. Taxpayers are granted a tax-free personal allowance depending on their situation (e.g., single, dependent children) amounting to €10,570 in 2024. That figure increases for those who have dependent children or dependent relatives or if the taxpayer is disabled. VAT at a standard rate of 21% is imposed on most goods and services, including digital services.

5. The Netherlands

The Netherlands divides all income as coming from one of three categories: 1) salaries, wages, benefits in kind, pensions, and homeownership income; 2) enterprise income from substantial business holdings; 3) savings and investment income. Each category has its own deductions and tax rates, and general tax credits apply to net income after the three categories are totaled. Income is taxed at progressive rates of 9.32%, 36.97% or 49.5%. Contributions for social security, health insurance, disability insurance and unemployment insurance are also imposed. Married couples must file jointly unless they have filed for divorce, and some unmarried couples must also file jointly.

U.S. Tax Rate for Married Couples

The United States comes in at 13.3% in this category, giving it the 31st highest tax rate. The countries with the lowest all-in average personal income tax rates on married single-earner couples with two children are the Colombia (0%), Czech Republic (3.1%), Chile (7%), Slovak Republic (10.4%), and Costa Rica (10.5%). There’s quite a disparity between the highest and lowest income tax burdens among OECD countries.

What Countries Have the Lowest Personal Income Taxes?

Colombia at 0%, Chile at 7%, Costa Rica at 10.5%, Mexico at 11.3%, Korea at 15.8%, Estonia at 18.4%, and Switzerland at 18.5% have the lowest all-in income taxes for single filers with no children. The following five, is order of ascending income taxes are Israel, Czech Republic, New Zealand, Spain, Japan, and Poland.

What Is a Tax Haven Country?

A tax haven country is one where an employee—or, more commonly, a business owner—can lower their tax burden or avoid paying taxes altogether. This is extremely difficult to do if you are a salaried employee, but those who own a business and pay themselves through dividends or a salary from that business, and are able to register that business in a tax haven, may be able to legally dodge their tax liability. Common tax havens are the British Virgin Islands, Bermuda, Cayman Islands, Luxembourg, and Jersey. If you are considering this strategy, work with a cross-border CPA who will ensure everything is done legally.

What Are the Double Taxation Rules?

Double taxation is something to be avoided, if possible. It involves paying taxes twice on the same source of income. This typically occurs when someone has income from many different sources, often internationally. This can happen with a 401(k), as well as other tax-advantaged accounts such as individual retirement accounts (IRAs) and, as many United States business owners are aware, their limited liability company (LLC) income may be taxed twice as some foreign governments, such as Canada, do not recognize the business structure.

The Bottom Line

Income tax burdens vary so much by country because of the rates at which each country funds social insurance programs, such as old-age pensions and healthcare. In some countries, such as the Netherlands, social insurance taxes are almost as much as personal income taxes.

Each country provides different levels of benefits to its citizens, and individuals get different returns on the sums they pay into social insurance programs based on personal factors like income, age, and health status.

Different countries put taxpayers into different brackets based on their income level, marital status, and the number of dependents. Just because a country has an especially high or low overall income tax rate doesn’t tell you much about how you would fare in that country with all the circumstances that make up your unique situation.

Read the original article on Investopedia.