IMF How To Notes

How to Summarize and Interpret Income Tax Schedules

By Alexander D Klemm

September 26, 2025

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

Alexander D Klemm. "How to Summarize and Interpret Income Tax Schedules", IMF How To Notes 2025, 007 (2025), accessed September 28, 2025, https://doi.org/10.5089/9798229026352.061

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Summary

This note describes how most features of an income tax system (and to some extent social security and welfare) can be described as a combination of lumpsums and marginal tax rates and plotted in a summary chart. While this is by no means a new method, applying it consistently can help tremendously in understanding the impact of tax reforms on tax systems, including by identifying any unintentional humps or notches in tax schedules. This note uses this approach to discuss, for example, universal basic incomes, the issue of whether tax allowances should be phased out, and the difference between tax credits and allowances. It also points to the limitations of the approach, such as conditions that cannot be summarized in such tax schedules.

Subject: Average effective tax rate, Income, Income tax systems, Labor, Marginal effective tax rate, National accounts, Non-wage benefits, Social security contributions, Tax allowances, Tax policy, Taxes

Keywords: Average effective tax rate, Average Tax Rate, Income, Income Tax, Income tax systems, Marginal effective tax rate, Marginal Tax Rate, Non-wage benefits, Social security contributions, Tax allowances

Publication Details

You May Also Be Interested In...

Economic Impact of G20 Compact with Africa Initiative on Member Countries

September 26, 2025

Euro Area Financial Fragmentation and Bond Market Stability

September 26, 2025

Unbalanced Trade 2.0

September 26, 2025

Informality and Shock Propagation in an Open Economy

September 26, 2025