The OECD’s Tax Policy Reforms 2026 report finds that governments pursued growth-oriented tax measures in 2025 while increasing progressivity in personal taxation, maintaining broadly stable corporate tax rates, and expanding revenue measures amid rising debt, demographic pressures, and defence spending.
The OECD has released its annual report, Tax Policy Reforms 2026, on 8 September 2026, which examines and compares tax reforms introduced, or announced, in 2025 across 92 jurisdictions. The analysis reveals that while governments pursued growth-focused measures, responses to mounting fiscal pressures remained measured overall.
Personal income tax becomes more progressive
Tax authorities across OECD member states used personal income tax reforms primarily to increase progressivity. Higher top rates and revised capital income taxation featured in several countries’ 2025 measures. Simultaneously, many governments continued cost-of-living relief for households, with certain jurisdictions introducing specific provisions to retain high-skilled workers and wealthy nationals.
Corporate tax rates hold steady amid strategic targeting
Corporate tax environments showed greater consistency. The average combined corporate income tax rate remained stable for a third consecutive year, as governments applied targeted incentives toward research, development, artificial intelligence, and defence sectors. A notable shift emerged in the taxation of highly profitable financial and other sectors, where temporary surtaxes and excess profit taxes became more prevalent.
Social contributions and VAT expand their reach
Social security contribution reforms continued moving toward wider bases and higher rates across multiple countries, addressing demographic pressures and expanded social protection spending. Governments found particular urgency in these measures given rising debt-servicing costs and defence expenditure demands. Value-added tax frameworks adapted to digital commerce realities, with authorities extending VAT obligations to non-resident suppliers and online platforms.
Property and health taxes gain prominence as revenue drivers
Property tax reform accelerated, becoming explicitly revenue-focused rather than merely structural—a departure from historical patterns. Health-related taxation emerged as the most common revenue-raising tool, with cigarette and nicotine product taxes increasing substantially.
Environmental policy and household relief diverge
Environmental and household measures proved mixed. Several nations expanded carbon pricing while others reduced fuel and electricity levies to relieve economic pressure on households and businesses.
Fiscal pressures demand coordinated action
OECD Secretary-General Mathias Cormann emphasised that targeted, growth-compatible revenue increases remain essential as nations rebuild fiscal capacity while protecting investment and living standards. Rising public debt, demographic shifts, and defence spending have narrowed room for manoeuvre across member economies.
