As indicated by the Organization for Economic Co-operation and Development (OECD), the country with the highest national income tax rate is the Netherlands at 52 percent, more than 12 percentage points higher than the U.S. top federal individual income rate of 39.6 percent.
Nonetheless, Netherlands’ Effective Tax Rate had its tax wedge for the average single worker in the Netherlands reduced by 0.6 percentage points from 37.0% in 2019 to 36.4% in 2020.
Taxes on single workers who are one-earner wedded couple with two kids went down en route.
In the mean time, child related benefits and tax provisions will generally reduce the tax for workers with children compared with the average single worker.
In 2020, the Netherlands had the 20th highest tax wedge among the 37 OECD member countries, occupying the same position in 2019.
In the Netherlands in 2020, this reduction (6.4 percentage points) was less than the OECD average (10.2 percentage points).
The tax wedge for a worker with children may be lower than for a worker on the same income without children, since most OECD countries provide benefits to families with children through cash transfers and preferential tax provisions.
The Netherlands had the 15th highest tax wedge in the OECD for an average married worker with two children at 30.0% in 2020,
which compares with the OECD average of 24.4%. The country occupied the 13th highest position in 2019.
In the Netherlands, income tax and employer social security contributions combine to account for 69% of the total tax wedge, compared with 76% of the total OECD average tax wedge.
The employee net average tax rate is a proportion of the net expense on labour income paid straight by the worker.
Considering child related benefits and tax provisions, the worker’s net average tax rate for a wedded worker with two kids in the Netherlands was 21.6% in 2020, which is the sixth highest as per OECD, and compared with 12.9% for OECD’s average.
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This implies that an average married worker with two kids in the Netherlands had a salary, after tax and family benefits, of 78.4% of their gross wage.
In the Netherlands, the average single worker faced a net average tax rate of 28.7% in 2020, compared with the OECD average of
24.8%.
That is to say, in the Netherlands the take-home pay of an average single worker, after tax and benefits, was 71.3% of their gross wage.
Somewhere in the range of 2009 and 2020, the tax for the a single worker decreased by 1.6 rate points in the Netherlands.
During this same period, the tax for a single worker increased gradually to 35.5% in 2013 and 2015 preceding reducing back to 34.6% in 2020.
