Individual Taxation

Will there now be individual taxation?

At its meeting on August 30, 2023, the Federal Council set the key points for the message on the introduction of individual taxation. This proposal will also serve as a counterproposal to the popular initiative “For civil status-independent individual taxation (Tax Justice Initiative).”

The aim is to correct the so-called marriage penalty, which is a consequence of joint taxation of spouses, by introducing individual taxation. This is intended to comply with the Federal Court’s ruling from 1984 and achieve taxation based on economic capacity.

Accordingly, individual taxation is to be introduced at all three levels of government (federal, cantonal, municipal). Married couples will in the future be taxed like unmarried couples and fill out two separate tax returns.

As can be seen from the key points, the child deduction for direct federal tax will be increased from 6,600 to 12,000 Swiss francs. For couples with only one income or a low second income, the reform will result in higher tax consequences than under the current system. The proposal will also include adjustments to the tax rates. Thus, the tax rates for low and middle incomes will be lowered, and for very high incomes, they will be slightly increased.

Based on these key points, the Federal Council will prepare the message on the Federal Act on Individual Taxation for Parliament by March 2024. As mentioned, this proposal will also serve as a counterproposal to the popular initiative “For civil status-independent individual taxation (Tax Justice Initiative).” However, if there is a change in the system and thus a switch to individual taxation, it is likely that several years will pass before the final implementation.