The OECD published a working paper on 2 June 2026 examining how population ageing may affect tax revenues across OECD countries, presenting simulations of tax-to-GDP ratios from 1950 to 2060 that show ageing could reduce the average ratio by one percentage point by 2060, with over ten countries facing declines exceeding two percentage points.
The OECD has published a working paper on The impact of population ageing on tax revenues in OECD countries on 2 June 2026.
Population ageing is a major structural trend across OECD countries, with potentially significant implications for public finances, yet its effects on tax revenues remain relatively understudied. This working paper examines the potential effects of demographic change on tax systems by analysing the distribution of tax bases across age groups and assessing the impact of ageing. It also explores how tax design may further exacerbate revenue pressures. The paper then analyses the implications of population ageing for labour income tax revenues as the working-age population evolves and considers how the relative importance of other tax bases such as consumption, capital income, and wealth-related taxes, may change depending on policy design. It also presents simulations of tax-to-GDP ratios from 1950 to 2060 that isolate the mechanical effects of demographic change under a no-policy-change scenario. These simulations illustrate how population ageing may influence tax revenues across OECD countries over time, as well as countries’ different exposures. The paper also highlights how tax system vulnerability to ageing is shaped by both demographic trends and tax design. Finally, it discusses potential policy considerations and areas of further work.
Introduction
Population ageing is a significant policy challenge in many OECD countries. As the share of older individuals grows, demand for age-related public expenditures such as pensions, healthcare, and social care is expected to rise in most countries. If these spending trends persist, population ageing will put increasing pressure on tax systems to finance growing expenditure programmes, while the share of working-age individuals in the population declines. Despite its growing importance, the impact of population ageing on tax revenues has been relatively understudied in the academic literature, owing in part to the uncertainties and complexities involved in accurately projecting revenues from different taxes over the long term.
This paper studies the implications of demographic shifts on tax systems. It explores the vulnerability or the resilience of countries’ tax systems to population ageing. It analyses how population ageing may affect different tax bases, and building on these insights, discusses how specific features of tax systems may shape population ageing’s impact on tax revenues. The paper also presents simulations of the tax-to-GDP ratio from 1950 to 2060 under a scenario where the age structure of the population changes in line with population projections and assuming tax per capita within each age group increases proportionally to GDP per capita.
These simulations are not intended as forecasts but shed light on the mechanical pressure that demographic change alone places on the tax-to-GDP ratio. While population ageing might affect productivity, wages or interest rates, each with implications for revenue, such effects are highly uncertain and are not incorporated in the simulations.
The simulated impact of population ageing on tax revenues varies across countries. The simulations show that, all else equal, population ageing weighs on the tax-to-GDP ratio from 2022 onwards in many countries. The year 2022 marks a tipping point for tax revenue as a share of GDP across the OECD; the tax-to-GDP ratio is shown to be lower under the projected future population structure if the distribution of tax revenue per capita by age is unchanged. The simulations show that on average, the tax-to-GDP ratio would be 1 percentage point lower under the age structure of 2060, with significant heterogeneity across countries: over 10 countries would face declines exceeding 2 percentage points, while 10 others would see gains. Changes in tax revenue are mainly driven by changes in the share of the working-age population and the share of the taxes paid by people above 65.
This paper proceeds as follows. Section 2 summarises the literature exploring the impact of population ageing on growth, public expenditures and tax revenues. Section 3 discusses the potential impact of population ageing on tax systems, including the impact on different tax bases and how specific features of tax systems may shape population ageing’s impact on tax revenues. Section 4 simulates the impact of changing population structures on tax-to-GDP ratios. Section 5 outlines potential extensions to the simulations and tax policy considerations that could be explored in future work.
