Zurich residents to benefit from lower taxes
People who live in Switzerland’s most expensive city Zurich can look forward to some financial relief, as some changes to the tax system have come into force from January 1st.
It is a well-known fact that the cost of living in Zurich is very high — not only on the Swiss or European scale, but on global one as well.
Everything from rents, property prices, and the cost of many other goods and services is more expensive than almost anywhere else.
READ ALSO: Why Zurich is the world's most expensive city to live in
However, one major expense will now be cheaper: taxes.
This year, city and canton residents will benefit from three ‘relief’ measures.
Compensating for inflation
If wages increase due to inflation, progressive tax rates lead to higher income taxes. This means that taxes go up more than actual, or real, salaries.
To offset this loss of purchasing power, the canton of Zurich will adjust the rates and deductions for the income and wealth tax to the accumulated inflation of 3.3 percent (even though the actual inflation rate is much lower).
This step, by the way, is beneficial for taxpayers, but less so for the public coffers: 100 million francs less will be generated for the canton and municipalities.
Higher deduction for health insurance premiums
As health insurance prices have gone up — by 8.3 percent in Zurich — residents will be able to deduct a higher amount on their tax return.
Specifically, this deduction will increase from 2,600 francs currently to 2,900 francs from 2024.
Only adults will benefit from this measure, however: children's premium deductions will remains unchanged at 1,300 francs.
This particular measure will result in a 45-million-franc loss of revenue for the canton and communes.
Parents will benefit from higher daycare deductions
Childcare services are notoriously high in Zurich — as much as 2,700 francs a month on average.
But from January 1st, parents in Zurich will be able to claim significantly higher deductions for daycare costs on their tax returns.
Previously, the amount per child was a maximum of 10,000 francs, which will now go up to 25,000 francs.
This corresponds approximately to the full cost of childcare provided five days a week for a year.
As a result of this measure, the canton and municipalities will ‘lose’ about 14 million francs in tax revenue.
However, authorities are hoping that as a result of this particular tax relief, more women will join (or re-join) the labour market and alleviate the shortage of skilled workers — which, in turn, will boost the local economy.
When will these tax-cutting measures kick in?
While tax declarations for 2023 are due on March 30th of this year, the new measures are valid from 2024, which means you can apply them for your 2025 taxes.
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It is a well-known fact that the cost of living in Zurich is very high — not only on the Swiss or European scale, but on global one as well.
Everything from rents, property prices, and the cost of many other goods and services is more expensive than almost anywhere else.
READ ALSO: Why Zurich is the world's most expensive city to live in
However, one major expense will now be cheaper: taxes.
This year, city and canton residents will benefit from three ‘relief’ measures.
Compensating for inflation
If wages increase due to inflation, progressive tax rates lead to higher income taxes. This means that taxes go up more than actual, or real, salaries.
To offset this loss of purchasing power, the canton of Zurich will adjust the rates and deductions for the income and wealth tax to the accumulated inflation of 3.3 percent (even though the actual inflation rate is much lower).
This step, by the way, is beneficial for taxpayers, but less so for the public coffers: 100 million francs less will be generated for the canton and municipalities.
Higher deduction for health insurance premiums
As health insurance prices have gone up — by 8.3 percent in Zurich — residents will be able to deduct a higher amount on their tax return.
Specifically, this deduction will increase from 2,600 francs currently to 2,900 francs from 2024.
Only adults will benefit from this measure, however: children's premium deductions will remains unchanged at 1,300 francs.
This particular measure will result in a 45-million-franc loss of revenue for the canton and communes.
Parents will benefit from higher daycare deductions
Childcare services are notoriously high in Zurich — as much as 2,700 francs a month on average.
But from January 1st, parents in Zurich will be able to claim significantly higher deductions for daycare costs on their tax returns.
Previously, the amount per child was a maximum of 10,000 francs, which will now go up to 25,000 francs.
This corresponds approximately to the full cost of childcare provided five days a week for a year.
As a result of this measure, the canton and municipalities will ‘lose’ about 14 million francs in tax revenue.
However, authorities are hoping that as a result of this particular tax relief, more women will join (or re-join) the labour market and alleviate the shortage of skilled workers — which, in turn, will boost the local economy.
When will these tax-cutting measures kick in?
While tax declarations for 2023 are due on March 30th of this year, the new measures are valid from 2024, which means you can apply them for your 2025 taxes.
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