Portugal among OECD countries where wages recorded real growth in 2024

Portugal was one of the 33 OECD countries where wages before income tax registered real growth between 2023 and 2024, according to the report “Taxing Wages 2024”, released today by the organization.

In the period under analysis, wages rose in nominal terms in 37 of the 38 countries of the Organisation for Economic Co-operation and Development (OECD) and recorded real increases (above inflation) in 33 cases.

In addition to being part of the group of countries where real wages before taxes have increased, Portugal is also among the countries where the tax rate on income from work (IRS) has fallen, along with Austria, Ireland, the Netherlands and Sweden.

The study also indicates that the tax burden of a single worker earning the average salary saw a reduction in 2024 in most OECD countries, with Portugal appearing as one of three cases in which this reduction was greater than 1 percentage point.

“The reduction in the tax burden for a single worker earning the average salary exceeded 1 pp in Finland (-1.57 pp), the United Kingdom (-1.74 pp) and Portugal (-1.75 pp)”, the study states, detailing that, while in Finland and the United Kingdom the reduction was due to a reduction in Social Security contributions, in Portugal this decrease is associated with the reduction in rates that affect the first six income brackets and the updating of the brackets.

This edition of “Taxing Wages” includes a special chapter on the tax levied on income from work, taking into account its role as a source of tax revenue - in Portugal, IRS is the second most profitable tax, behind VAT - seeking to understand the impact of tax deductions and benefits.

Although most tax systems in OECD countries include tax deductions and benefits for personal income tax purposes, the study states that their weight varies depending on the profile of the household, and is generally greater in families with dependents than in single families without children.

On average, in 2024, tax benefits reduced the tax bill by around 1.9% in the case of a single worker earning the average salary, compared to a reduction of 4.7% in a couple with a single earner and two dependents and 7.3% in a single-parent family earning the equivalent of 67% of the average salary.

Deductions amounted to 15.9% of the taxable income of a single person with an average salary, 21.7% for a couple (with a single income earner) and two dependents and 27.7% for a single-parent family with an income below the average salary.

The results suggest that “on average across OECD countries, tax benefits tend to be more progressive than deductions, which can sometimes be regressive” as they can result in a higher deduction for higher-income households.

Portugal was one of the 33 OECD countries where wages before income tax registered real growth between 2023 and 2024, according to the report “Taxing Wages 2024”, released today by the organization.

In the period under analysis, wages rose in nominal terms in 37 of the 38 countries of the Organisation for Economic Co-operation and Development (OECD) and recorded real increases (above inflation) in 33 cases.

In addition to being part of the group of countries where real wages before taxes have increased, Portugal is also among the countries where the tax rate on income from work (IRS) has fallen, along with Austria, Ireland, the Netherlands and Sweden.

The study also indicates that the tax burden of a single worker earning the average salary saw a reduction in 2024 in most OECD countries, with Portugal appearing as one of three cases in which this reduction was greater than 1 percentage point.

“The reduction in the tax burden for a single worker earning the average salary exceeded 1 pp in Finland (-1.57 pp), the United Kingdom (-1.74 pp) and Portugal (-1.75 pp)”, the study states, detailing that, while in Finland and the United Kingdom the reduction was due to a reduction in Social Security contributions, in Portugal this decrease is associated with the reduction in rates that affect the first six income brackets and the updating of the brackets.

This edition of “Taxing Wages” includes a special chapter on the tax levied on income from work, taking into account its role as a source of tax revenue - in Portugal, IRS is the second most profitable tax, behind VAT - seeking to understand the impact of tax deductions and benefits.

Although most tax systems in OECD countries include tax deductions and benefits for personal income tax purposes, the study states that their weight varies depending on the profile of the household, and is generally greater in families with dependents than in single families without children.

On average, in 2024, tax benefits reduced the tax bill by around 1.9% in the case of a single worker earning the average salary, compared to a reduction of 4.7% in a couple with a single earner and two dependents and 7.3% in a single-parent family earning the equivalent of 67% of the average salary.

Deductions amounted to 15.9% of the taxable income of a single person with an average salary, 21.7% for a couple (with a single income earner) and two dependents and 27.7% for a single-parent family with an income below the average salary.

The results suggest that “on average across OECD countries, tax benefits tend to be more progressive than deductions, which can sometimes be regressive” as they can result in a higher deduction for higher-income households.

Portugal was one of the 33 OECD countries where wages before income tax registered real growth between 2023 and 2024, according to the report “Taxing Wages 2024”, released today by the organization.

In the period under analysis, wages rose in nominal terms in 37 of the 38 countries of the Organisation for Economic Co-operation and Development (OECD) and recorded real increases (above inflation) in 33 cases.

In addition to being part of the group of countries where real wages before taxes have increased, Portugal is also among the countries where the tax rate on income from work (IRS) has fallen, along with Austria, Ireland, the Netherlands and Sweden.

The study also indicates that the tax burden of a single worker earning the average salary saw a reduction in 2024 in most OECD countries, with Portugal appearing as one of three cases in which this reduction was greater than 1 percentage point.

“The reduction in the tax burden for a single worker earning the average salary exceeded 1 pp in Finland (-1.57 pp), the United Kingdom (-1.74 pp) and Portugal (-1.75 pp)”, the study states, detailing that, while in Finland and the United Kingdom the reduction was due to a reduction in Social Security contributions, in Portugal this decrease is associated with the reduction in rates that affect the first six income brackets and the updating of the brackets.

This edition of “Taxing Wages” includes a special chapter on the tax levied on income from work, taking into account its role as a source of tax revenue - in Portugal, IRS is the second most profitable tax, behind VAT - seeking to understand the impact of tax deductions and benefits.

Although most tax systems in OECD countries include tax deductions and benefits for personal income tax purposes, the study states that their weight varies depending on the profile of the household, and is generally greater in families with dependents than in single families without children.

On average, in 2024, tax benefits reduced the tax bill by around 1.9% in the case of a single worker earning the average salary, compared to a reduction of 4.7% in a couple with a single earner and two dependents and 7.3% in a single-parent family earning the equivalent of 67% of the average salary.

Deductions amounted to 15.9% of the taxable income of a single person with an average salary, 21.7% for a couple (with a single income earner) and two dependents and 27.7% for a single-parent family with an income below the average salary.

The results suggest that “on average across OECD countries, tax benefits tend to be more progressive than deductions, which can sometimes be regressive” as they can result in a higher deduction for higher-income households.