Taxes in Estonia

The OECD tax wedge: income tax plus employee AND employer social contributions as a share of total labour cost, for a single person at exactly the average wage. It is a comparable type case between countries — not your personal tax rate.

The OECD net personal average tax rate: income tax plus the EMPLOYEE’s social contributions as a share of gross wage earnings, for a single person with no children at exactly the average wage. This is the rate you can apply to a salary. It is deliberately smaller than the tax wedge on the same page, which measures a wider bite (it adds the employer’s contributions) over a wider base (total labour cost) — two honest answers to two different questions.

Our own calculation: the OECD average annual wage multiplied by (1 − the OECD net personal average tax rate). Both legs share the same denominator — gross wage earnings — which is what makes the multiplication valid; the tax wedge, which is measured against total labour cost including the employer’s contributions, cannot be used this way. It is a comparable type case for a single average earner: not your salary, and not a full net-income figure, since it excludes benefits, deductions and consumption taxes.

The top statutory rate on wage income — what the last euro of a very high salary is taxed at, combining central and typical sub-central rates (OECD). Almost nobody pays this on their whole income: it applies only above the top threshold.

The statutory (headline) corporate income tax rate from OECD Corporate Tax Statistics. Effective rates after deductions and incentives are typically lower; this is the rate on paper that companies plan around.