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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and global
levels. We are a 501(c)(3) nonprofit
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The U.S. Tax Burden on Labor
• Average workers in the United States face two major taxes on wage income:
the individual income tax and the payroll tax (levied on both the employee
and the employer).
• Although slightly more than half of a U.S. worker’s payroll tax burden is paid
by their employer, the worker ultimately pays this tax through lower take-
home pay. Before accounting for state and local sales taxes, the U.S. tax
wedge—the tax burden that a single average wage earner faces—was 29.8
percent of pretax earnings in 2019, adding up to $18,368 in taxes.
• The U.S. tax wedge of 29.8 percent has consistently been below the OECD
average, which was 36 percent in 2019.
• The U.S. tax wedge rose by 0.2 percentage points in 2019, but remains about
2 percentage points lower than prior to the Tax Cuts and Jobs Act (TCJA) that
reduced most individual income tax rates.
Senior Policy Analyst
TAX FOUNDATION | 2
Individual income taxes and payroll taxes make up a large share of tax revenue in the United States
and together comprise the tax burden on labor. The U.S. tax code is progressive, combining a
highly progressive individual income tax with a more regressive payroll tax.1 While the U.S. code is
progressive, the average worker is burdened by taxes. Due to provisions in the tax code that benefit
families, the tax burden on families is often lower than the burden on single, childless workers earning
an equivalent pretax income.
The Organisation for Economic Co-op