More generous tax deductions for parents in Switzerland from 2023

From 2023, parents of children in Switzerland will be allowed to deduct up to 25.000 Swiss francs per child in childcare costs in their annual tax return. The current laws allow deductions of 10.100 Swiss francs, so the change will have a significant impact on families across Switzerland. 

Tax revenue will be reduced by 10 million Swiss francs

The new law is expected to reduce the tax revenue of the Swiss government by around 10 million Swiss francs. An earlier attempt to increase the tax-deductibility of childcare was rejected in a referendum in September 2020. Then it was proposed to increase the general deduction for children from 6.500 to 10.000 Swiss francs.

The new proposals, which differ from the previous attempt, are no longer able to be voted down via a referendum, since the deadline to do so passed on January 20. However, only external expenses for the care of children under 14 years old will be tax-deductible. 

Higher deductions come as good news for many families

Many middle-income families will be pleased with the news, as paying for childcare out of pre-taxed earnings can be expensive. Especially in cantons that have high taxes, it can often be financially difficult for both parents to work. 

The new rule is not without some controversy though; for families that live on one income stream, it may seem as though they are subsidising dual-income families, and not reaping the benefits of the new rules.