||This bachelor thesis aims to analyze the impact of Slovakia’s 2004 tax and welfare reform on the labor market. Changes in tax code and social benefits scheme affected net take-home-pay of the employees as well as labor costs to employer, in turn influencing labor supply and labor demand. This work uses both, micro and macro approach to estimate changes in the tax burden on labor. Analysis of the changes to the tax burdens of employees and employers in different household types and at different levels of income was performed using micro methodology. It is argued in the conclusion that while motivation to work was increased significantly for low and high income workers, labor demand did not change correspondingly. High employer social security contributions remained a major barrier to employment of low-wage workers. Thus, the reforms failed to resolve the long-standing problem of long-term unemployment in Slovakia. Cuts in assistance in material need, furthermore, caused deterioration in the living standards for those dependent on social assistance and increased poverty.