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Sweden has strongly decreased the tax and social security burden over the past ten years. Taxpayers at high earnings, however, continue to take home less than 50% of what they cost to their employer (“total labour costs”). The difference to other OECD countries is smallest for singles at average full-time earnings: there the average tax wedge (income taxes plus employee and employer social security contributions minus cash transfers as a percentage of total labour costs) in Sweden is 6.7 percentage points higher than for the OECD average. The tax wedge for lone parents at 67% of the average wage with 2 children, however, continues to be high compared to other OECD countries.
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Average Tax Wedge for different wage levels and household types
in % of total labour costs
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The tax wedge strongly decreased for all families with about 7 percentage points as a result of the tax cuts implemented over the past 10 years; only single taxpayers at higher earnings faced a smaller decrease in the tax wedge of ‘only’ 5 percentage points.
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download graphs and data for all countries (xls/371kB)
In 2009, the overall tax burden decreased for all types of households analysed in the Taxing Wages Report. For a single employee with an average wage the average tax wedge narrowed by 1.6 percentage points to 43.2% of total labour costs. A married couple with 2 children, one spouse earning the average wage, the other earning a third of that, saw their tax wedge decrease also by 1.6 percentage points to 37.2% of labour costs.
The tax wedge in Taxing Wages is calculated on the basis of the average gross wage earnings of full-time employees in the private sector, including employees at management level. The corresponding 2009 annual average gross wage in Sweden was SEK 356 725.
More Information
A detailed description of the Swedish tax system and the calculations for the tax wedge in Sweden is included in the Taxing Wages Report.
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