Does Europe have higher taxes than us?
In general, when it comes to tax rate in Europe and the US, they are similar in the United States and some Western European countries, such as Germany and the United Kingdom. However, company and personal income tax rates are much higher in America than in low-income tax countries, such as Romania and Hungary.
UK taxes are generally higher than in the US. Depending on where you live and how much you earn, UK personal income taxes can reach rates as high as 45% — significantly higher than the top US income tax rate of 37%. UK capital gains tax rates, meanwhile, top out at 28% while US capital gains tax rates max out at 20%.
TOTAL TAX REVENUE
In 2021, taxes at all levels of US government represented 27 percent of gross domestic product (GDP), compared with a weighted average of 34 percent for the other 37 member countries of the Organisation for Economic Co-operation and Development (OECD).
The highest personal income tax rates in 2021-23 were found in Ivory Coast (60%), Finland (56.95%), and Denmark (56.00%). Bhutan has the highest sales tax at 50%, followed by Hungary (27%), with Croatia, Denmark, Norway, and Sweden tied at 25%.
Germany's tax rates significantly exceed those of the United States. For instance, Germany's highest marginal income tax rate stands at 45%, while the top rate in the US is 37%.
Among European OECD countries, the average statutory top personal income tax rate lies at 42.8 percent in 2024. Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) have the highest top rates. Hungary (15 percent), Estonia (20 percent), and the Czech Republic (23 percent) have the lowest top rates.
As a share of the economy, the United States is nowhere close to the “highest-taxed country in the world” and does not raise nearly as much tax revenue as other developed countries, many of which are in Europe.
Top Personal Income Tax Rates in Europe, 2024
Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) have the highest top statutory personal income tax rates among European OECD countries.
The United States ranked 31st¹ out of 38 OECD countries in terms of the tax-to-GDP ratio in 2022. In 2022, the United States had a tax-to-GDP ratio of 27.7% compared with the OECD average of 34.0%.
Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.
What is USA tax rate?
The U.S. currently has seven federal income tax brackets, with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. If you're one of the lucky few to earn enough to fall into the 37% bracket, that doesn't mean that the entirety of your taxable income will be subject to a 37% tax.
Yes. Spain taxes its tax residents on their pension, retirement, and foreign social security earnings at a rate from 19% to 47%, depending on overall income. Non-tax residents, however, face tax rates of 8% to 40% depending on overall income.
The reason these countries have such high tax burdens comes down to one policy choice: expansive government welfare systems. A large welfare state is increasingly popular among American voters.
In Germany, healthcare is partially free due to the social contributions to the public healthcare system. This means that individuals can receive medical services free of charge for the most part. However, some low copayments apply, such as the €10 charge for a visit to the general practitioner (GP) every quarter.
Norway's top rate of 39.5 percent is lower than that of the United States. America's income taxes are highly progressive. The top-earning 20 percent of families pay 92 percent of all federal income taxes and 75 percent of total federal taxes.
Restults show that, despite being in sixth place, the tax burden in Italy is slowly decreasing registering -0.2 points. It dropped from 42.6% in 2016 to 42.4% in 2017. Considering the complete grid of countries, on top of the most overtaxed countries stands France with the highest rate: it has a tax level of 46.2%.
Federal Income Taxes
In 2023, the top federal income tax rate in Canada is 33%, while the top federal income tax rate in the US is 37%. However, there are some key differences in the way that the two countries calculate taxable income.
The OECD average tax wedge in 2022 was 34.6% (2021, 34.6%). In 2022, Germany had the 2nd highest tax wedge among the 38 OECD member countries, occupying the same position in 2021.
- New Hampshire: 0%
- Oregon: 0%
- Alaska: While there's technically no state-level sales tax, some localities may impose their own taxes, averaging a low combined rate of 1.76%.
- Hawaii: 4.44%
- Wyoming: 5.34%
- Wisconsin: 5.43%
- Maine: 5.50%
- Virginia: 5.65%
According to the updated MoneyGeek analysis, the most “tax friendly” state overall was Nevada, where the median family owes about 3% of its income in taxes. Meanwhile, 13 states earned either a D or F grade for tax burdens.
How much is the tax burden in Europe compared to the US?
In contrast to the US combined rate of 15.3%, European rates range between 13.97% (not including medical insurance and pension contributions) in Switzerland and a whopping 65-68% in France, based on the 2022 table by Trading Economics.
As of 2022, the average taxation rate for a single person without children who earned an average salary in the European Union was 29.62 percent of their total earnings.
| European OECD Country | Top Statutory Personal Income Tax Rate |
|---|---|
| France (FR) | 55.4% |
| Germany (DE) | 47.5% |
| Greece (GR) | 44.0% |
| Hungary (HU) | 15.0% |
The IRS taxes the richest Americans at 37%, whereas the top federal tax rate in Canada is 33%. Wealthy Americans have access to many tax deductions that Canada's Alternative Minimum Tax does not allow.
In most European countries, the taxation system includes income tax, value-added tax (VAT), and social security contributions. Income tax rates can vary, and some countries have progressive tax systems where the more you earn, the higher percentage you pay.
