How do US income taxes compare to UK income tax?
Updated August 2, 2023

July 31, 2023
Advert

In the most simplistic terms, because taxes are quite complicated with credits and deductions, I looked for a comparison of US and UK income taxes.

UK Income Tax Rates

In the UK, there is a personal allowance of £12,570, which is similar in terms to the US Standard Deduction. 1

UK tax bands are as follows:

Band Taxable income Tax rate
Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £125,140 40%
Additional rate over £125,140 45%

Note that UK income tax rates are different if you live in Scotland.

In addition to these tax bands, there are some child and work credits which are income based, but these are paid directly and not part of your calculations.

The Organisation for Economic Co-operation and Development (OECD) aggregates a lot of economic information on countries, such as GDP, taxes, and more. Their data is extremely useful.

In the United Kingdom, the average single worker faced a net average tax rate of 23.6% in 2022, compared with the OECD average of 24.6%. In other words, in the United Kingdom the take-home pay of an average single worker, after tax and benefits, was 76.4% of their gross wage, compared with the OECD average of 75.4%.

 

Taking into account child related benefits and tax provisions, the employee net average tax rate for an average married worker with two children in the United Kingdom was 18.8% in 2022, which is the 11th highest in the OECD, and compares with 14.1% for the OECD average. This means that an average married worker with two children in the United Kingdom had a take-home pay, after tax and family benefits, of 81.2% of their gross wage, compared to 85.9% for the OECD average. 2

 US Income Tax Rates

In the USA, the current personal deduction for income tax varies on filing status:

  • $12,950 for single filers and married filing separately
  • $25,900 for joint filers
  • $19,400 for heads of household.

Deductions for dependents are figured into your withholding when you are paid.

US tax rates are as follows:

Band Taxable income Tax rate
Personal Allowance

Up to $11,000

($22,000 for married couples filing jointly)

0%
Basic rate

$11,001 to $44,725

($22,001 to $89,450 for married couples filing jointly)

12%
Higher rate I

$44,726 to $95,375

($89,451 to $190,750 for married couples filing jointly)

22%
Higher rate II

$95,376 to $182,100

($190,751 to $364,200 for married couples filing jointly)

24%
Higher rate III

$182,101 to $231,250

($364,201 to $462,500 for married couples filing jointly)

32%
Additional rate

Over $231,250

($462,500 for married couples filing jointly)

35%

According to the OECD:

In the United States, the average single worker faced a net average tax rate of 24.8% in 2022, compared with the OECD average of 24.6%. In other words, in the United States the take-home pay of an average single worker, after tax and benefits, was 75.2% of their gross wage, compared with the OECD average of 75.4%.

 

Taking into account child related benefits and tax provisions, the employee net average tax rate for an average married worker with two children in the United States was 13.3% in 2022, which is the 23rd lowest in the OECD, and compares with 14.1% for the OECD average. This means that an average married worker with two children in the United States had a take-home pay, after tax and
family benefits, of 86.7% of their gross wage, compared to 85.9% for the OECD average. 3

 TLDR

The above data means the US has lower income taxes:

Country Single no Kids Married 2 Kids
United Kingdom 23.6% 18.8%
United States 24.8% 13.3%

References

1. Income Tax rates and Personal Allowances . (2023). Retrieved 1 August 2023, from https://www.gov.uk/income-tax-rates

2. OECD – Taxing Wages – the United Kingdom. (2023). Retrieved 1 August 2023, from https://www.oecd.org/tax/tax-policy/taxing-wages-united-kingdom.pdf

3. OECD – Taxing Wages – the United States. (2023). Retrieved 1 August 2023, from https://www.oecd.org/tax/tax-policy/taxing-wages-united-states.pdf

Frequent Questions About Money

Explore our Guides
tech 10 2
Community Chatter
Loading RSS Feed
Community Chatter
Loading RSS Feed

Related Articles