Slovakia’s taxation on labor continues to rise, with the Council for Budget Responsibility projecting a record 39.8 percent of GDP by 2026. This is well above the EU average of 34.1 percent and the highest among the V4 countries, highlighting one of the heaviest labor tax burdens in the European Union.
The increase is driven by several measures introduced since 2023, including higher health insurance rates, raised ceilings for social contributions, and two new higher income tax brackets. Labor taxes now account for over 20 percent of GDP, forming the largest share of government revenue. Between 2004 and 2023, the effective labor tax rate grew from 35.1 to 38.1 percent, showing a long-term upward trend.
The OECD recommends reducing labor taxation and shifting the burden toward consumption, property, or environmental taxes to support competitiveness and economic growth. While families with children may benefit from tax credits, experts warn that the high overall rate could affect workforce motivation, Slovakia’s investment appeal, and the international competitiveness of Slovak businesses.
Reforming the tax system, they say, could help balance public finances while promoting sustainable economic development. Policymakers face the challenge of maintaining revenue while easing the tax burden on labor to encourage growth and retain skilled workers.
Source: TASR
