Skatteministeriet
8. april 2016

Average tax rates for all taxpayers

Average tax payments for all taxpayers and their socio-economic groups

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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 average tax is shown as a percentage of income for 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 Danish tax system is progressive. This means that the average tax increases when the income increases. At the same time, the marginal tax will be greater than the average tax.

The average tax of 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 calculated on different tax bases, the average tax can also be calculated in different ways.

The 4.88 million taxpayers in table 1 have been divided according to the size of their average tax payment in 2014 using different combinations of taxes and incomes.

Table 1. Average tax percentages in 2016
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 99 2 85 2 84 2 82 2
Negative taxes (green check) 141 3 146 3 100 2 100 2
0 315 6 316 6 170 3 154 3
1 - 19 289 6 441 9 499 10 510 10
20 -24 379 8 753 15 455 9 458 9
25 - 29 994 20 1,970 40 1,106 23 1,111 23
30 - 34 1,466 30 886 18 1,485 30 1,490 30
35 - 39 945 19 223 5 745 15 745 15
40 - 44 205 4 66 1 184 4 183 4
45 - 49 60 1 18 0 60 1 58 1
50 - 59 9 0 2 0 13 0 11 0
60 - 6 0 3 0 6 0 7 0
All taxpayers 4,908 100 4,908 100 4,908 100 4,908 100
Average tax rate for all taxpayers 34.3 % 29.8 % 34.0 % 34.1%

Note: Law model calculations based on a random sample of 3.3% of the population. Data from 2013 calculated for 2016 based on December 2015 predictions.
Note: For all taxpayers the average tax rates have been calculated as the total tax payments in relation to the total income.

From table 1 it is among other things observed that:

  • The average income tax and property value tax for all taxpayers as a percentage of the total taxable income is about 34% and about 30% of personal income plus positive net capital income. The lower share is due to a broader income definition for the latter.
  • Four out of five taxpayers pay less than 30 % in average tax of their personal income plus positive net capital income.
  • Around 5% pay more than 35% 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 2016
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 40.4 34.2 39.0 39.5
Wage earners 36.0 30.3 35.6 35.7
Top management 42.7 38.4 43.3 43.0
High level wage earners 38.1 32.8 38.1 38.1
Medium level wage earners 36.0 30.2 35.6 35.6
Basic level wage earners 33.8 27.7 33.2 33.2
Other wage earners 32.7 27.0 32.4 32.4
Wage earners, not reported 34.4 29.1 34.2 34.5
Unemployed and on sickness benefit 29.2 25.8 26.8 26.9
Students 11.6 10.9 13.4 15.2
Early retirement pensioners and pensioners 30.3 29.3 29.4 29.,5
Other non-working groups 25.1 23.3 23.8 24.0
In work 36.3 30.6 35.9 35.9
Not in work 28.9 27.6 27.9 28.1
All taxpayers 34.3 29.8 34.0 34.1

Note: Law model calculations based on a random sample of 3.3% of the population. Data from 2013 calculated for 2016 based on December 2015 predictions.
Note: The average tax rates have been calculated as the group's total tax payments in relation to the group's total income.
Note: The socio-economic groupings have been made according to Statistics Denmark's socio-economic Classification. (Opens in a new window).

According to the last two columns, self-employed pay average taxes of approx. 39%, top management about 43%, while other wage earner pay average taxes of between 32% and 38%.

Recipients of transfer incomes on average pay around 27% to 29% of their income in total taxes.