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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

Example Sentences

Examples are provided to illustrate real-world usage of words in context. Any opinions expressed do not reflect the views of Dictionary.com.

Most significant is fiscal drag, where the thresholds that apply to different rates of tax on income are frozen.

From BBC • Mar. 3, 2026

This is what is known as fiscal drag.

From BBC • Apr. 6, 2025

Frozen thresholds contribute towards what is known as "fiscal drag" and amount to big tax rises – where people can be hauled into paying a tax, or a higher rate of it, courtesy of inflation.

From BBC • Oct. 30, 2024

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

From BBC • Mar. 19, 2024

We'll have more on that so-called "fiscal drag" from our chief economics correspondent, Dharshini David, next.

From BBC • Mar. 6, 2024

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