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Around one half a million Swiss couples are exempt from the marriage penalty affected. They pay more tax than they would if they were unmarried and are even at a disadvantage when it comes to their AHV pension.
But what is the marriage penalty How exactly can you counteract it in your tax return and are you possibly also affected?
You can find out everything you need to know about the marriage penalty in Switzerland in this article.
To calculate and understand the marriage penalty in Switzerland, you should read our Understanding the tax system.
Surely you are aware that our tax system is a Progression includes and progressively increasing income taxes as income rises.
Here is an illustration of tax progression in the canton of Zurich:
If you look at the graph for Zurich's tax progression, you will notice how taxes rise sharply as income increases.
If you now consider that the incomes of married couples are added together, you have already found the cause of the marriage penalty.
Important: The marriage penalty applies in particular to high-earning couples who both earn very equal incomes and have similar asset levels.
Let's calculate an example of the marriage penalty.
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In order to Calculate marriage penalty we consider a Couple from the city of Zurichwhich both have a Salary of CHF 70,000 per year received. The income is close to the Median wage therefore not yet exceptionally high.
The couple has been living together until now and each of the two people has been paying tax separately on their annual income.
With the Tax calculator from the canton of Zurich the following provisional and simplified tax burden can be calculated:
Each Individual paid in total CHF 7,928.70 in taxes. If both earn the same amount, the bill is due twice and a total of CHF 15,857.40 is charged.
When the two now meet for the Marriage decide, the Income of CHF 140,000 added together. The new tax bill for the now married couple then looks as follows:
Everything again in a nutshell?
| Income | |
|---|---|
| Partner | CHF 70,000 |
| Partner | CHF 70,000 |
| Total | CHF 140,000 |
| Taxes | |
|---|---|
| In concubinage | CHF 15,857.4 |
| As a married couple | CHF 18,043.9 |
| Marriage penalty | |
|---|---|
| In Franconia | CHF 2,186.5 |
| In per cent | 13.79% |
Tip: You can calculate how high the marriage penalty is for you personally in just a few minutes using the tax calculator for your canton of residence. You can find it via Google.
As the tax progression has a stronger effect in the above example, a increased tax bill of CHF 18,043.9 is due.
This is due to the Marginal tax rate.
Explanation of termsThe marginal tax rate indicates how the tax burden changes when your taxable income changes.
Example: Our exemplary couple from Zurich has a marginal tax rate of 24.47%. If they earn CHF 1,000 more in the future, they will pay 24.47% or around CHF 245 in taxes.
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A Study by the federal government has shown that the Marriage penalty varies from canton to canton has an impact. Discrimination against married couples does not exist everywhere and especially not everywhere to the same extent.
Another exciting aspect of the study is the realisation that there are often rewarded for tax reasons becomes when one spouse earns significantly less. This is in line with the traditional division of roles (one spouse stays at home and looks after the children while the other works full-time).
Fortunately, the planned Individual taxation should be counteracted. Both spouses should be considered separately and income should therefore no longer be totalled.
In August 2023, the Federal Council defined the key parameters for this and Parliament is due to deal with it in 2024. The implementation of the Individual taxation and thus an end to the marriage penalty will probably take a while yet.
For the couple in the example above, here is a comparison for various cantons and municipalities throughout Switzerland. In Zug, the couple would have to pay a total of CHF 7,390 less in taxes and in Basel CHF 12,307 more. This comparison is overall and simulates a change of residence, not just the difference due to the marriage:
Unfortunately the marriage penalty applies retroactively to the year of the marriage.
While in Germany, for example, people like to get married in December in order to reduce their taxes for the whole year, the Swiss might consider postponing their wedding until next January. At least if the marriage penalty applies and if the timing is considered from a purely tax perspective.
Until individual taxation is implemented, there is fortunately at least a partial remedy to the marriage penalty.
With the so-called Second earner deduction can partially counteract the higher progression of the marriage penalty. This second earner deduction is deducted from the lower income.
Married Double earner can deduct 50% from the direct federal tax on the lower income (maximum CHF 13,400 and minimum CHF 8,100). This is known as the Double income deduction or Second earner deduction. Cantonal tax must be paid in accordance with the requirements of the canton of residence.
At the Federal tax all married couples are allowed to deduct a lump sum of CHF 2,600. The deductions vary from canton to canton.
Disadvantages in taxes and also disadvantages in the AHV pension (maximum of 1.5 times the maximum pension), so where are the advantages for spouses?
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It will probably be a few more years before individual taxation is implemented and the marriage penalty is abolished. Until then Married couples in Switzerland benefit from the second earner deduction and at least partially cushion the marriage penalty.
Instead of focussing on the disadvantages, the advantages of marriage should also be considered. Married couples have serious advantages, especially in the event of death.
And once individual taxation has been implemented, support for families in Switzerland will also be better and fairer again.
Is the marriage penalty a barrier to marriage for you? Feel free to share your opinion in the comments.
Each canton offers a free tax calculator. There you can enter and compare your details as an individual and as a married couple.
The info about the current The second earner deduction or double earner deduction in Zurich and other cantons can be found in the cantonal guidelines. You can find these via Google.
The tax progression throughout Switzerland always depends on the canton and the respective municipality. Above you have seen some examples and a progression table.
5 responses
We are a retired couple. Total income (AHV, pension fund pension): CHF 114,576, taxable income CHF 111,500, taxable assets CHF 33,000.
Taxes: CHF 13,058 (canton/municipality/church) / CHF 2,555 (direct federal tax) / Total: CHF 15,613.
Questions:
a)How is the income divided?
b)Which tax rate is applied?
c)Does individual taxation not penalise retired couples?
A brief addition to your text. You write: "In order to calculate the marriage penalty, we consider a couple from the city of Zurich who both receive a salary of CHF 70,000 per year. Their incomes are therefore not yet exceptionally high, close to the median salary." It is important to understand that this is not the salary that is paid out, but the taxable income. That is a big difference and puts the statement about the median salary into perspective. Someone can also earn 120,000 a year (salary) and achieve a taxable income of CHF 70,000 by buying into a pension fund, paying into 3a, continuing education, etc.
Thanks for the addition!
As you say, taxable income can also be reduced (more here) ... Or you do nothing of the sort and the couple simply earn 70t francs each.
Of course, the two salaries cannot simply be added together and considered the same, as the second earner deduction is used ... the comparison is therefore simplified, but shows the problem 🙂
Oli agrees; with a net salary of CHF 70,000, the taxable income will be lower due to the deductions. In addition, the individual taxable incomes of a cohabiting couple cannot simply be added together. As indicated in the text itself, the taxable income of spouses who live in a legally and actually unseparated marriage must be reduced by the special deduction for gainful employment of both spouses (two-earner deduction) (in the canton of Zurich: max. CHF 5,900).
The above example would therefore come closer to reality if, for example, personal deductions of CHF 20,000 each were assumed and the tax amount resulting from a taxable income of CHF 50,000 each were compared with the tax amount that would result for a married couple based on a taxable income of CHF 94,100 (2x CHF 70,000 - 2x CHF 20,000 - CHF 5,900). This would also result in an additional burden for the couple, but the difference would only amount to around CHF 520.
Incidentally, the linked "federal study" shows that the marriage penalty is primarily a problem of direct federal taxes (note on the rate structure: the canton of Zurich applies a double rate analogous to the federal government). As described in the text, the marriage penalty "does not exist everywhere and especially not everywhere to the same extent". In addition to the question of how income is distributed between the partners, this must also be seen against the background that the cantons of SZ, NW, GL, FR, SO, BL, SH, AI, SG, GR, AG, TG, NE and GE do not have a double rate for family taxation, but apply full or partial splitting. The problem of the marriage penalty could therefore also be solved for direct federal taxes using this method. It is therefore also understandable that the cantons are opposed to the introduction of individual taxation due to the greater additional administrative burden.
@Marc: The figures from your example would probably not be entirely accurate in practice. The average citizen will not be able to claim such high deductions on such a taxable income 😀