fiscal drag

British

noun

economics the process by which, during inflation, rising incomes draw people into higher tax brackets, so that their real incomes may fall; this acts as a restraint on the expansion of the economy

"Collins English Dictionary — Complete & Unabridged" 2012 Digital Edition © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012

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fiscal drag

When those thresholds are frozen, more income is taxed at higher rates as someone's earnings rise, a process known as fiscal drag.

From BBC ● Jan. 31, 2026

Despite most of the bands remaining static, more people will pay a higher rate of tax due to "fiscal drag".

From BBC ● Feb. 25, 2025

The effect is known as "fiscal drag" as it drags more people into paying tax in the first place, and others into higher tax bands.

From BBC ● May 30, 2024

Meanwhile, fiscal drag - as well as rising minimum pay rates - mean somebody working 35 hours a week on the minimum wage is now having to pay tax on almost £8,300 of their earnings.

From BBC ● Apr. 4, 2024

The committee said that more people were being drawn into paying tax, known as fiscal drag, and their tax affairs were becoming more complicated.

From BBC ● Feb. 27, 2024

Definitions and idiom definitions from Dictionary.com Unabridged, based on the Random House Unabridged Dictionary, © Random House, Inc. 2023