Tax is the most important and plentiful financial resource for the state. It is defined as a form of imposed levy by the government. Today, taxes are omnipresent and there isn’t a person that doesn’t have to pay them. There are many types of taxes and the aim of this thesis is to study and explain the distinction in the ‘tax wedge’ in Croatia in comparison to the countries of the OECD. The tax wedge is the difference between the corporate income tax of an employer and the actual salary of an employee after the taxes. The tax wedge greatly influences the unemployment rate. The increase of the tax wedge affects the increase of the cost of labor for a company. The paper compares the tax wedge in the Republic of Croatia with OECD countries. By comparing the tax wedge in the Republic of Croatia with the OECD countries, it is noticed that Croatia is not among the countries with a higher tax wedge. The overall tax wedge in Croatia is slightly below the average for OECD member states.