Average tax rates for all taxpayers
Average tax shows the proportion of the total annual income which goes to pay income tax to the authorities. Based on the representative calculations on the law model, the tax burden is shown as a percentage of income for the various groups of taxpayers.
Often used alongside average tax is the concept of marginal tax, which measures how much income tax is paid on any extra money earned, or as it is popularly called on the last earned krone. Representative calculations of marginal tax are shown on a separate page.
The burden of personal income taxes on the individual taxpayer is measured as the total income taxes which the individual taxpayer pays as a percentage of income. However, because income taxes are calcuated differently, the average tax can also be calculated in several ways.
Here average taxes have been calculated based on the taxable income, i.e. net income consisting of all incomes minus all allowances and based on personal income before allowances for labour market contributions and special pension savings, i.e. business and transfer income without allowances, except for payments made into employer pension schemes.
The 4.76 million taxpayers in table 1 have been divided according to the size of their average tax payment in 2011.
| Table 1. Average tax percentages in 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Average tax payment | Income tax and property value tax as a % of: | Income tax, property value tax and labour market contribution as % of: | Income tax, property value tax, labour market contribution and share income as % of: | |||||
| Taxable income | Personal income with positive net capital income | Personal income before labour market contributions with positive net capital income | Personal income before labour market contributions with positive net capital income and share income | |||||
| Pct. | (1,000) | Pct. | (1,000) | Pct. | (1,000) | Pct. | (1,000) | Pct. |
| Negative income | 105 | 2 | 85 | 2 | 80 | 2 | 80 | 2 |
| Negative taxes (green check) | 150 | 3 | 160 | 3 | 100 | 2 | 100 | 2 |
| 0 | 270 | 6 | 270 | 6 | 95 | 2 | 75 | 2 |
| 1 - 19 | 345 | 7 | 555 | 12 | 620 | 13 | 630 | 13 |
| 20 -24 | 535 | 11 | 900 | 19 | 580 | 12 | 580 | 12 |
| 25 - 29 | 1,085 | 23 | 1,790 | 38 | 1,005 | 21 | 1,010 | 21 |
| 30 - 34 | 1,485 | 31 | 710 | 15 | 1,385 | 29 | 1,390 | 29 |
| 35 - 39 | 535 | 11 | 205 | 4 | 635 | 13 | 635 | 13 |
| 40 - 44 | 185 | 4 | 65 | 1 | 190 | 4 | 190 | 4 |
| 45 - 49 | 53 | 1 | 14 | 0 | 55 | 1 | 54 | 1 |
| 50 - 59 | 6 | 0 | 2 | 0 | 8 | 0 | 8 | 0 |
| 60 - | 6 | 0 | 4 | 0 | 7 | 0 | 8 | 0 |
| All taxpayers | 4,760 | 100 | 4,760 | 100 | 4,760 | 100 | 4,760 | 100 |
| Average tax rate for all taxpayers | 33.2 pct. | 29.0 pct. | 33.2 pct. | 33.3 pct. | ||||
Note: Law model calculations based on a random sample of 3.3% of the population. Data from 2008 calculated for 2011 is based on December 2010 predictions.
In 2011, the average income tax and property value tax for all taxpayers as a percentage of the total taxable income is 33.2% and about 29% of personal income with positive net capital income. The lower share is due to a broader income definition for the latter.
Above 50% of all taxpayers pay less than 30 % in average tax, regardless of the 4 income definitions.
Around 5% pay more than 40% on average, and only a very little share pays more than 50& on average.
Table 2 shows the corresponding average tax rates for all taxpayers divided into socio-economic groups.
| Table 2. Average tax rates for socio-economic groups in 2011 | ||||
|---|---|---|---|---|
| Socio-economic group | Income tax and property value tax as a % of: | Income tax, property value tax and labour market contribution as % of: | Income tax, property value tax, labour market contribution and share income as % of: | |
| Taxable income | Personal income with positive net capital income | Personal income before labour market contributions with positive net capital income | Personal income before labour market contributions with positive net capital income and share income | |
| Pct. | Pct. | Pct. | Pct. | |
| Self-employed and spouses | 42.2 | 32.7 | 37.9 | 38.2 |
| Wage earners | 34.7 | 29.6 | 35.0 | 35.1 |
| Top management | 41.6 | 36.8 | 41.9 | 41.8 |
| High level wage earners | 37.6 | 32.7 | 37.9 | 37.9 |
| Medium level wage earners | 35.3 | 30.2 | 35.6 | 35.6 |
| Basic level wage earners | 32.4 | 27.3 | 32.9 | 32.9 |
| Other wage earners | 31.4 | 26.9 | 32.4 | 32.4 |
| Wage earners, not reported | 34.1 | 29.1 | 34.4 | 34.7 |
| Unemployed and on sickness benefit | 28.2 | 24.8 | 25.6 | 25.6 |
| Students | 10.1 | 9.5 | 12.9 | 13.2 |
| Early retirement pensioners and pensioners | 29.3 | 28.2 | 28.3 | 28.4 |
| Other non-working groups | 24.5 | 22.2 | 22.7 | 23.0 |
| All taxpayers | 33.2 | 29.0 | 33.2 | 33.3 |
| In work | 35.1 | 29.8 | 35.2 | 35.3 |
| Not in work | 28.0 | 26.7 | 27.0 | 27.1 |
Note: The law model calculations have been made based on a random sample of 3.3% of the population. Data from 2008 calculated for 2011 is based on December 2010 predictions.
The socio-economic groupings have been made according to Statistics Denmark’s socio-economic Classification. (Opens in a new window).
The average tax rates have been calculated as the group’s total tax payments in relation to the group’s total income.
According to the last two columns, self-employed pay average taxes of approx. 38%, top management about 42%, while salaried staff pays average taxes of between 32-36%.
Recipients of transfer incomes pay on average around 25-28% of their income in total tax.