Individual Taxation in Switzerland

Individual Taxation in Switzerland – Increased Burden for Families with Unequal Incomes

Individual taxation in Switzerland is intended to replace the existing system of joint taxation for married couples. Politically, it is promoted as “fairer,” since each person is taxed independently of marital status. Dual-income couples are expected to benefit, as their incomes are no longer combined and thus pushed into higher tax brackets. However, what sounds fair at first glance carries significant disadvantages for many young families—especially for those where one partner works part-time or stays at home.

Winners of the Reform

Dual-income couples: When both partners earn similar amounts, the income is evenly split across two tax returns. The tax burden decreases significantly, as each person remains in a lower tax bracket.

Well-educated couples without young children: Individual taxation is particularly attractive for couples with two high incomes and no childcare expenses.

Couples over 50 with adult children: Those who have passed the intense family phase benefit disproportionately, as the costs of childcare disappear while the tax advantages remain.

Losers of the Reform

Single-income families: Families where one partner stays at home (e.g., during the baby and toddler phase) are disproportionately affected. Even if the household income is the same, the tax burden is higher than for dual-income couples with the same total income.

Part-time family models: Many mothers work only part-time after birth and during early childhood (often until the child enters kindergarten or first grade). Because daycare places for babies and toddlers in Switzerland are very expensive and must often be paid privately, some families deliberately maintain only one income (usually the father), as in many cantons the mother’s earnings would almost entirely be consumed by daycare costs. Under individual taxation, this is penalized, as incomes are unevenly distributed. Paradoxically, families with only one income lose the most.

Young families with small children: This group bears the main burden. Rising health insurance premiums, high daycare fees, and housing costs already strain household budgets. Adding higher taxes intensifies the financial pressure significantly.

Example Calculations – Who Pays More?

To illustrate the differences, consider the following comparisons:

Example 1: Dual-income couple with equal income

• Partner A: 70,000 CHF

• Partner B: 70,000 CHF

• Total household income: 140,000 CHF

Joint taxation: Income is combined → 140,000 CHF, higher progression, tax burden e.g., 25,000 CHF.
Individual taxation: Each pays taxes on 70,000 CHF. Due to lower progression, total tax burden ≈ 20,000 CHF → 5,000 CHF tax savings.

Example 2: Single-income family

• Partner A: 140,000 CHF

• Partner B: 0 CHF

• Total household income: 140,000 CHF

Joint taxation: Income combined, progression slightly mitigated, tax burden e.g., 25,000 CHF.
Individual taxation: Partner A pays taxes on 140,000 CHF → tax burden ≈ 28,000 CHF. Partner B pays 0 CHF → 3,000 CHF higher burden, even though the family earns the same as in Example 1.

Example 3: Part-time model

• Partner A: 110,000 CHF (full-time)

• Partner B: 30,000 CHF (part-time)

• Total household income: 140,000 CHF

Joint taxation: Income combined, tax burden ≈ 25,000 CHF.
Individual taxation: Partner A pays on 110,000 CHF, Partner B on 30,000 CHF. Total burden ≈ 27,000 CHF → 2,000 CHF higher burden.

Author’s note: The examples are for illustration purposes and may vary by canton.

Conclusion

On paper, individual taxation may appear fair, but in practice, it shifts the burden onto young families with small children who require childcare and traditional families with only one income. Winners are dual-income couples with similar earnings and couples without childcare responsibilities. Losers are families who consciously or out of necessity adopt a single- or partial-income model. Various examples show that for the same total household income, single-income families pay significantly more taxes than dual-income families. Once again, it becomes clear that in Switzerland, family and child planning are made less attractive through one-sided legislative adjustments.

Societal Implications

This new taxation model does not create more freedom of choice but establishes a subtle pressure for mothers to work more in order to avoid tax penalties—even if it does not suit their life situation or is hardly feasible due to missing or expensive daycare. True fairness would require complementary measures, such as higher child allowances, targeted relief for single-income families, and better childcare options. Without these, individual taxation further exacerbates social inequality for families.

Interestingly, this newly created issue receives little media attention. Meanwhile, declining birth rates and shortages of skilled workers make headlines more often. It seems as if Swiss society suffers from a kind of cognitive dissonance—or perhaps the driving forces in politics and the voter demographic have largely passed the stage of family planning and forget or ignore that younger generations rely on some level of support. Unfortunately, this support is increasingly being withdrawn. The younger demographic is taxed more heavily than they are relieved. This is also reflected, for example, in the campaign to abolish the imputed rental value (Eigenmietwert). A concerning development that will almost certainly generate discontent and even more financial pressure on the younger generation. This is not a good basis for a healthy political climate or a positive future for Switzerland.

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