This paper deals with the analysis of personal income tax as the most significant tax form of most tax systems and analysis of wages, primarily the way they are taxed.. Personal income tax is a direct tax form, which is taxed on the income of citizens/households. The paper provides a theoretical insight into the concept of personal income tax. The paper defines and describes the following basic elements of personal income tax in the Republic of Croatia: who is the payer of personal income tax, what is the personal income tax base, how much is the personal deduction, which personal income tax rates are valid and how they changed over time and duration of one tax period. It is necessery to know the elements of personal income tax because they are importnat for the salary calculation procedures, and in addition to them, the terms of social security contributions and surtax are defined in the paper too. The paper contains examples of salary calculation in the Republic of Croatia in accordance with the latest amendments of the Income Tax Act. Emphasis is placed on the international comparison of the Republic of Croatia with other EU member states, especially in the area of tax burden on labor, net/gross wages and total labor costs. The tax burden of work is presented in this thesis with the help of two indicators: the implicit tax rate of labor and the tax wedge.