Following the tax cuts of 2017, the wealthiest Americans saw their top marginal federal income tax rate fall to 37% from the 39.6% they had been paying since 2013.
How does that top-tier rate of taxable annual income compare to the rest of the world?
That’s not an easy question to answer because each country’s national tax code has different types of deductions and credits, not to mention different treatments for income from capital gains.
But comparing the top rate of taxable annual income offers some insight into how countries view their wealthiest households as a source of public revenue. (These are the countries with the widest gaps between rich and poor.)
Some countries charge an additional surtax on their richest taxpayers, sometimes referred to as a “solidarity” charge or contribution, as it is called in Greece and Portugal. Germany tags an extra fee on its wealthiest to fund regional development. Japan has a surtax to help rebuild from the 2011 Fukushima nuclear disaster. Some of the countries charging the highest income tax rate are among the richest countries in the world.
To identify the 25 countries with the highest personal income tax rate in 2021, 24/7 Wall St. used multinational accounting firm KPMG data for 142 countries. Countries are ranked by the highest marginal tax rate, that is, the highest rate applied (from a certain income threshold).
The United States ranks 41st out of 140 countries based on the highest marginal national income tax rate, according to KPMG. This puts the highest annual income tax rate on America’s wealthiest between Norway’s and Mexico’s, but considerably lower than some of the highest rates in the world’s other leading economies, including the U.K., France, Germany, Japan, and China. (These are the U.S. states collecting the most income tax per person.)
It’s important to recognize that these rates are marginal, meaning the highest taxable income rate only applies to money earned above a threshold. In 2021, that 37% top income tax rate in the United States applied only to annual taxable income above $628,301 for a married couple filing jointly and above $523,600 for single filers.
To identify the 25 countries with the highest personal income tax rate in 2021, 24/7 Wall St. used multinational accounting firm KPMG data for 142 countries (taking out dependent territories). Population figures for 2020 are from the World Bank World Development Indicators. Some country information came from PricewaterhouseCoopers, a multinational accounting firm. Conversions to dollars are based on mid-November exchange rates. A country’s tax policy and rate can change at any time, and taxes on residents and non-residents may differ.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.