Rachel Reeves is being urged to take urgent action to end the so-called 60 per cent tax trap, which is expected to catch more than 2.1 million people during the 2026-27 tax year.
Critics warn the problem is growing rapidly as frozen thresholds pull increasing numbers into the trap.
Investment platform IG has called on the Chancellor to reform the rule that removes the tax-free personal allowance from anyone earning more than £100,000, creating an effective marginal tax rate of 60 per cent.
The firm said the freeze on tax and childcare thresholds is discouraging people from investing and undermining financial ambitions, warning that the group affected often mid-career professionals with rising incomes represents a key pool of potential retail investors in Britain.
The punishing marginal rate arises from the gradual withdrawal of the £12,570 tax-free personal allowance, which disappears at a rate of £1 for every £2 of income above the £100,000 mark.
By the time earnings reach £125,140, the entire allowance has been eliminated.
This threshold has remained unchanged since its introduction in 2010, dragging ever more workers into its scope as wages have risen.
HMRC data obtained through a Freedom of Information request by NFU Mutual reveals that 801,000 individuals earning within this band will forfeit 60 pence of every additional pound to income tax.
By the time earnings reach £125,140, the entire allowance has been eliminated
|GETTY
A further 1.26 million people earning above £125,140 will lose their personal allowance entirely.
Had the threshold kept pace with consumer price inflation since 2010, it would now stand at £156,000.
The burden extends well beyond the headline tax rate, with the loss of 30 hours free childcare when one parent exceeds £100,000 and an additional 9 per cent deducted from those repaying student loans.
Research from IG found that half of all workers feel unable to invest sufficiently to accumulate wealth due to tax pressures, a figure that soars to 92 per cent among parents with nursery-age children.
A further 1.26 million people earning above £125,140 will lose their personal allowance entirely
| GETTYMost of these families indicated they would immediately increase their investments if childcare support were not withdrawn at the £100,000 threshold.
The tax trap is producing a chilling effect on career progression, with four in five higher-earning households taking deliberate steps to remain below the threshold.
Nearly a third have cut their working hours, while 28 per cent have declined promotions and roughly a quarter have refused bonuses or pay increases.
The Office for Budget Responsibility announced alongside yesterday's Spring Statement that it will conduct further analysis examining how Britain's marginal tax rates compare internationally, with findings expected in a summer report.
The fiscal watchdog will assess whether elevated marginal rates are constraining economic growth
| GETTYThe fiscal watchdog will assess whether elevated marginal rates are constraining economic growth.
When factoring in the 2 per cent national insurance contribution, workers in the trap retain just 38 pence from each additional pound earned.
Sean McCann, chartered financial planner at NFU Mutual, said: "It's the ambition of many people to reach an income of £100,000, but it comes with an unexpected sting in the tail."
The OBR has forecast that the share of taxpayers in higher or additional rate brackets will climb from 15 per cent in 2021-22 to 24 per cent by 2030-31, with thresholds frozen until 2031.
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