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Tax Relief for Families in Europe, 2021


Most countries provide tax relief to families with children—typically through targeted tax breaks that lower income taxes. While all European OECD countries provide tax relief for families, its extent varies substantially across countries.

One way to measure targeted tax relief for families is to compare the tax burdens on labor of a family with one earner and two children and a single worker without children, both earning the same pretax income. Larger differences imply more extensive tax relief for families.

The tax burden on labor—or “tax wedge”—is defined as the difference between an employer’s total labor cost of an employee and the employee’s net disposable income. In other words, it is the sum of income taxes and payroll taxes of a worker earning the average wage in a country, divided by the total labor cost of this worker.

Tax Relief for Families in Europe 2021 countries provide tax relief for families vs single worker without children

In the European countries covered, a family with one earner and two children faced on average a tax burden of 28.3 percent in 2020. The average tax burden of a single worker without children was 39.6 percent, 11.3 percentage points higher than a family.

Poland had the largest disparity between the two tax wedges of all countries covered, with a 21.6 percentage-point difference between its 13.2 percent tax wedge for families and 34.8 percent tax wedge for single workers.

Turkey had the smallest gap with tax burdens of 38.2 percent on families and 39.7 percent on singles, a difference of only 1.5 percentage points.

Tax Burden on Labor of Families and Single Workers Earning a Nation’s Average Wage in European OECD Countries, 2020
  Single person, no children One-earner married couple, 2 children Percentage-point difference
Austria (AT) 47.3% 32.0% -15.3
Belgium (BE) 51.5% 34.9% -16.7
Czech Republic (CZ) 43.9% 26.1% -17.8
Denmark (DK) 35.2% 25.1% -10.1
Estonia (EE) 36.9% 26.8% -10.1
Finland (FI) 41.2% 36.7% -4.4
France (FR) 46.6% 37.9% -8.8
Germany (DE) 49.0% 32.9% -16.1
Greece (GR) 40.1% 37.1% -3.0
Hungary (HU) 43.6% 30.1% -13.5
Iceland (IS) 32.3% 18.6% -13.7
Ireland (IE) 32.3% 16.1% -16.2
Italy (IT) 46.0% 36.4% -9.6
Latvia (LV) 41.8% 31.1% -10.8
Lithuania (LT) 36.9% 20.1% -16.8
Luxembourg (LU) 37.5% 16.3% -21.3
Netherlands (NL) 36.4% 30.0% -6.4
Norway (NO) 35.8% 32.2% -3.6
Poland (PL) 34.8% 13.2% -21.6
Portugal (PT) 41.3% 30.0% -11.3
Slovak Republic (SK) 41.2% 30.1% -11.1
Slovenia (SI) 42.9% 25.5% -17.4
Spain (ES) 39.3% 33.9% -5.4
Sweden (SE) 42.7% 37.5% -5.2
Switzerland (CH) 22.1% 9.6% -12.5
Turkey (TR) 39.7% 38.2% -1.5
United Kingdom (GB) 30.8% 26.4% -4.5
Average 39.6% 28.3% -11.3

Source: OECD, “Taxing Wages,” April 2021, https://stats.oecd.org/Index.aspx?DataSetCode=AWCOMP#.

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