Global Average Wage and Tax Comparison Explained
We decided to choose a few key metrics; Average annual wage, total income tax %, net annual wage, mandatory minimum wage, income tax % on minimum wage, net wage.
We’re very happy with the final result; you can quickly compare countries and discover where you might be better off.
You can also see which countries have a gulf between their minimum and average earners. We found that in some countries the average earner will make 20 times the amount of a minimum wage earner!
All amounts are in GBP converted from the local currency at a mid-market rate.
How we calculated tax
This was the biggest challenge, every county (and state) has tax bands based on income, some have federal deductions, different rates depending on age, and even which street you live on (Switzerland).
To give people a meaningful number they could compare between countries and US states we calculated the income tax you would pay on the average annual wage (not including other deductions like National Insurance contributions, medicare, life insurance, wealth taxes, property taxes etc..) as a percentage of the gross wage.
So for the UK the income tax range is 0% – 45% however the actual tax you’ll pay on the average wage there (£26,500) is 12.5%.
For the United States we combined federal and state taxes together. Some states also have a city tax (e.g. New York City) which has not been included.
You can see the average tax paid visualised here.
This is not a global standard yet. Surprisingly many Scandinavian countries, often heralded for their progressive social welfare policies, did not have a mandatory legal minimum wage. They do, however have union and trade agreements between employers and employees. As these policies did not extend to everyone in the country they are listed as having no minimum wage.
In the United States some states do not have a mandatory minimum wage. In these cases we used the federal minimum wage instead.
Data & sources
Our data has come from over 100 websites, calculators, government data, Wikipedia and data sites updated by real citizens such as numbeo. You can see a full list here.
In every case we have used the latest available data, with most of the wage averages coming from 2013 or 2014. Also the majority of the tax information is from 2014.
If you think you’ve spotted a mistake, or think we can improve the data send us an email to firstname.lastname@example.org along with any relevant sources.
This data was compiled with extreme care and accuracy. All figures are believed to be correct at the time of publishing. MoveHub and www.movehub.com are not tax experts or independent financial advisers. You should always consult a tax expert.