Allowances, Flat Rates & Withholding Tax in Switzerland: What Changes in 2025

The 2025 tax year introduces a number of changes to allowances, flat rates, and withholding tax. The aim is to modernize the tax system, make it fairer, and provide targeted relief for working individuals and families. Those who are aware of the changes can optimize their tax burden and benefit from additional deduction opportunities.

New and Increased Allowances

Child Deduction under Federal Direct Tax

One of the key updates concerns the child deduction: it will rise from CHF 6,700 to CHF 12,000 per child under federal direct tax. For families, this represents a substantial tax relief.

Education Allowances and Other Flat Rates

Many cantons are also increasing their education allowances and flat rates. These adjustments aim to ease the financial burden on families with school-aged or university students.

Insurance Deductions

Deductions for health and life insurance premiums are also being revised. Depending on the canton, maximum amounts will increase, allowing taxpayers to claim more premium costs for tax purposes.

Updated Withholding Tax Regulations

The revision of federal legislation brings various changes to withholding tax in 2025, mainly affecting expats, cross-border commuters, and foreign employees:

• Clarifications: Provisions for taxing foreign income will be harmonized.
• More obligations for employers: Companies must submit more detailed reports and bear additional administrative responsibilities.
• Transparency: Cross-border commuters and employees on temporary assignments will receive clearer statements, making it easier to understand which amounts are withheld.

Tax Deductions 2025: What You Need to Know

Medical and Healthcare Costs

The threshold for deducting healthcare costs will be lowered. Eligible expenses still include doctor visits, medication, dental treatments, and medical aids – but with a slightly reduced minimum, more taxpayers will benefit.

Education and Training Costs

The promotion of education and training will be further strengthened. Higher deductible amounts are intended to make acquiring new qualifications more attractive.

Donations

Charitable donations remain a reliable way to combine tax benefits with social engagement. However, maximum deduction limits still vary by canton.

Pillar 3a

Deductions for tied pension savings (Pillar 3a) are updated annually based on wage trends and inflation. Both employees with a pension fund and self-employed individuals benefit from this tax-efficient form of saving.

Changes to Real Estate & Commuting Costs

Deductions for Homeowners

Property owners can continue to deduct maintenance costs and certain flat rates. In some urban cantons, these deductions have been slightly adjusted to ensure a more balanced tax burden.

Commuting Costs

At the federal level, the commuting deduction remains capped at CHF 3,000. Some cantons, such as Zurich and Bern, allow higher amounts. For bicycles, the flat rate remains CHF 700 (CHF 800 in Basel-Stadt).

Tips for Taxpayers

• Keep a yearly checklist of deductions to avoid missing any benefits.
• Make full use of the new higher allowances.
• Collect receipts digitally to save time when filing your return online.
• Check for cantonal differences – detailed knowledge often leads to extra savings.

Conclusion: 2025 as an Opportunity to Optimize

The 2025 tax year introduces several forms of relief, particularly for families and working individuals. Higher child deductions, adjusted insurance deductions, and new flat rates offer tangible benefits. Careful planning and timely application of these changes can lead to significant savings while ensuring full compliance with legal requirements.