Where in Switzerland is the Lowest Tax and the Highest Tax Rate

Zug is known as the canton with the lowest tax rate in Switzerland while Neuchatel is the canton with some of the highest personal income tax rates. Within these cantons, the town of Baar in Zug has the lowest tax rate at just 5.5 per cent for an individual earning 100,000 CHF. Meanwhile, in Enges in Neuchatel, the same person could expect a tax rate of 18.7 per cent.

Check out my post here to find out just how much tax you would pay in the city of Zurich and the important factors that influence your tax rate.

Switzerland has a federal tax system with taxation occurring on the federal level, the cantonal level, and on the municipal level. Therefore, when comparing the lowest and the highest tax rate across Switzerland, not only the differences between the individual cantons needs to be considered but also the difference between neighbouring municipalities.

And these differences often are not small. Moving from one town to another can have a surprisingly large impact on your tax bill.

If you earn 75,000 CHF while living in the city of Basel, you would owe 11,900 CHF in tax. But if the same person lived in Zug, they would pay just 4,900 CHF.

That is a difference of 7,000 CHF!

Find out where in Switzerland you will have the lowest tax rate and where you can expect to have the highest rate.

Income Tax in the Cantons

The following is a ranking of the cantons from the lowest to the highest income tax rates.

The ranking is based on data from the Swiss Tax Department ESTV, for a married couple earning a joint income of 175,000 CHF.

Unsurprisingly, Zug is the canton with the lowest tax rates, however, many of the small cantons such as Schwyz, Nidwalden, Obwalden, Appenzell-Innerhoden, and Glarus also have very low tax rates.

Bilingual and majority French-speaking Swiss cantons tend to have the highest income taxes. However, Solothurn and St. Gallen both also have high taxes. Geneva lies squarely in the middle.

However, there is a big difference between municipalities, not just the cantons.

Income Tax in the Municipalities

Due to the federal tax system, the tax rate also varies between municipalities.

Therefore, moving from one municipality to another can make quite a difference.

This is especially the case if you earn a higher income. For example, if you earn a gross income of 100,000 CHF while living in Kilchberg, Zurich, you will be taxed at a rate of 8.68 per cent. But if you live in Rifferswil, you will be taxed at 11.86 per cent.

That is a difference of over 3,000 CHF.

The same is the case in other cantons. Imagine if you live in St. Gallen city and decide to move to the neighbouring municipality of Mörschwil to a house that overlooks Lake Constance.

In this case, the tax rate on an income of 100,000 CHF in St. Gallen city would fall from 10.71 per cent in St. Gallen to just 7.74 per cent in Mörschwil.

Again, this could result in adding 3,000 CHF more to your wallet.

For this reason, before moving to a new town, it might be wise to check what impact moving could have on your tax bill.

The lowest and highest tax rates in Switzerland for a single person

The Swiss Tax Department ESTV releases data on the income tax rates for every municipality across Switzerland.

The five lowest tax rates and the five highest tax rates are listed in the tables below.

As expected, Zug dominates with the lowest tax rates in Switzerland, with Baar taxing high-income earners at just 8.6 per cent.

Bern and Neuchatel have some of the highest tax rates at 21.3 per cent for an income of 150,000 CHF.

Nonetheless, even for low-income earners in the 60,000 CHF range, the percentage difference between the lowest and highest tax rates is 10 per cent.

The lowest and highest tax rates for a married couple

For married couples, the list looks similar. In this case, Baar becomes even more attractive for couples earning over 100,000 CHF.

Even for very high-income earners at 300,000 CHF, the tax rate is arguably incredibly low.

Also apparent from these two tables, is that the more you earn the more you should pay attention to where you live. For couples earning over 150,000 CHF, the difference between the lowest and highest rates is almost 15 per cent.

The lowest and highest tax rates for a married couple with children

Couples with children are able to profit from a number of deductions that reduce their total tax bill. These deductions are not related to the respective postcodes where they live, but once again there is quite a significant difference between the two extremes of Zug and Neuchatel.

Again, Baar tops the list with the lowest tax rate and Enges tops the list with the highest tax rate in Switzerland.

So why isn’t everyone moving to local tax havens in Zug and Schwyz?

Fiscal federalism, the tax system of fiscal federalism that Switzerland has been praised for allowing people to ‘vote with their feet’, namely by moving to different areas within a country in response to economic policies.

Why then, if people are mobile and able to move according to economic policies don’t all Swiss people move to Baar and minimise their taxes?

Well, there are many factors that influence such a decision, but viewed from a simply economic perspective, such a move only makes sense for high-income earners.

Firstly, as the Swiss tax rates are progressive, low-income earners will pay much less anyway than high-income earners.

Secondly, the difference of a 3 per cent tax rate will have a much larger impact on the total tax bill for a person earning 200,000 CHF per year, than someone earning just 60,000 CHF.

Lastly, there is also a correlation between low tax municipalities in Switzerland and high rental costs.

To show this, let’s take our wonderful tax paradise of Zug. According to data from the Swiss Homeowners Association HEV, a three-bedroom apartment in Zug on average costs 1,674 CHF. In comparison, the average cost of a three-bedroom apartment in Neuchatel is just 897 CHF.

Therefore, by moving to Zug, while you may save on taxes, you can expect to pay more for housing.

For low-income earners, it is actually often financially smarter to live in a high tax area. In general, rental costs are lower in such areas. Moreover, due to the higher tax rates, especially in cities, public swimming pools, public libraries, and other public goods are provided.

Thus, I would advise a move based on tax reasons only from an income starting at 150,000 CHF per year and higher.

Your postcode affects your tax rate but where you should live in Switzerland depends on more

The difference between the lowest and the highest tax rate in Switzerland is large. Although some postcodes may seem particularly attractive due to their tax policies, this is definitely not the only factor that should be taken into account when considering a move.

Beyond simply looking at the tax rate, factors such as your income, your personal status, as well as your preferences for public goods should be factored into the decision.

In general the decision to move based on tax rates only becomes relevant passed a certain threshold starting at around 150,000 CHF per year.