Governments advance tax reforms in 2025 as fiscal pressures mount | Report

Governments across 92 jurisdictions introduced tax reforms in 2025 to support growth and investment, though revenue-raising measures to address mounting fiscal pressures remained modest, according to a press release issued by the Organisation for Economic Co-operation and Development (OECD) on 8 September 2026. The findings appear in the new Tax Policy Reforms 2026 report, which compares reforms introduced or announced last year. It shows that policy choices diverged significantly across countries, reflecting differences in economic conditions and national priorities. The report examines how countries are working to sustainably finance public services, social protection, investment, and other spending needs. It highlights the tension between slow growth, rising public debt, and mounting demands on public finances.

The report is set against a backdrop of growing fiscal strain in advanced economies. Public debt across OECD countries has risen sharply in recent years. Spending pressures continue to grow from higher debt-servicing costs, population ageing, and defence needs. At the same time, revenue collection is not keeping pace with these demands. The OECD analysis assesses how governments are adjusting personal, corporate, consumption, and property tax systems in this context.

Personal income tax reforms in 2025 generally aimed to make tax systems more progressive, including through higher top PIT rates and changes to the taxation of capital income. Many countries continued to provide targeted relief to households facing cost-of-living pressures. Several introduced measures to attract and retain high-skilled workers, wealthy individuals, and nationals living abroad. Social security contribution reforms moved towards broader bases and higher rates in several countries, reflecting demographic pressures. These changes also mirror the growing cost of social protection systems.

OECD Secretary-General Mathias Cormann emphasized the urgency of the fiscal challenge facing member states.

“Public debt across OECD countries has risen sharply, and spending pressures are growing from higher debt-servicing costs, population ageing and defence needs. Revenue collection is not keeping pace,” Cormann said. He added that “targeted, growth-friendly measures to raise revenue need to be part of how governments rebuild fiscal space while safeguarding investment and living standards.”

Corporate income tax measures remained focused on investment and competitiveness, with the average combined CIT rate broadly stable for the third consecutive year. Governments continued to use targeted incentives for research and development, artificial intelligence, defence, and other strategically important sectors.

Higher taxes on financial institutions and other highly profitable sectors became more common, often through temporary surtaxes or excess profit taxes. VAT reforms focused on the digital economy, including extending obligations to non-resident suppliers and online platforms. Health-related taxes were among the most common revenue-increasing measures in 2025, particularly on cigarettes and new tobacco and nicotine products. Several countries also increased carbon taxes or expanded carbon pricing, while others reduced taxes on fuel or electricity to ease pressure on households and firms. Property tax reforms were less frequent but were more clearly aimed at raising revenue than in previous years, especially through recurrent taxes on immovable property.