Rising health expenditures and population ageing prompted many governments to increase social security contribution rates in 2024, reflecting a broader trend towards increasing revenues to strengthen the long-term sustainability of social protection systems, according to a new OECD report.
The tenth annual edition of Tax Policy Reforms: OECD and Selected Partner Economies provides a comprehensive overview of tax reform trends, offering cross-country comparisons and tracking policy developments over time.
This 2025 edition describes tax reforms implemented in 2024 across 86 jurisdictions, including all OECD countries. The report finds that governments increasingly implemented reforms to raise revenues for specific spending needs - most notably through measures aimed at funding current and future expenditures linked to population ageing.
Another trend emerging in 2024 was the introduction or expansion of personal income tax relief to support employment, particularly among certain demographic groups or sectors, to mitigate some of the effects of population ageing.
The report also confirms the continuation of a trend first identified in 2023 - a move away from the broad tax relief measures enacted during the COVID-19 pandemic and the subsequent period of inflation towards a combination of rate increases and more narrowly targeted tax support across the core areas of the tax system.
"Tax policies served as a stabilising tool to protect households and sustain demand in the wake of recent shocks," OECD Secretary-General Mathias Cormann said. "Governments are now introducing tax reforms to rebalance public finances, a welcome step to ensure fiscal sustainability, prepare for future challenges and adapt to long term structural transformations."
Consistent with another trend that emerged in 2023, many countries continued scaling back temporary value added tax (VAT) rate cuts and base narrowing measures in 2024 as inflationary pressures continued to ease, while others increased their standard VAT rate.
Health-related excise tax reforms continued gaining momentum as a tool for mobilising revenue and promoting healthier lifestyles, with many governments increasing taxes on tobacco, alcohol and sugar-sweetened beverages, according to the report.
A move away from temporary fuel tax relief towards higher fuel excise taxes was also seen in 2024. Additionally, high-income countries strengthened carbon prices for the second year in a row, with several countries opting to increase their carbon tax rates or expand their scope to include new sectors.
The report highlights how countries further expanded the use of tax policy to support the transition to a low-carbon economy in 2024. A number of governments combined carbon pricing with targeted tax incentives, including, for example, reduced VAT rates on solar panels or heat pumps, personal income tax (PIT) relief for sustainable transport, and corporate income tax (CIT) incentives for clean investments.
To access the report, data, and summary, visit: https://www.oecd.org/en/publications/tax-policy-reforms-2025_de648d27-en.html.
