Zug, Schwyz and Nidwalden plan to lower their taxes in 2026

The central Swiss cantons of Zug, Schwyz and Nidwalden are planning to reduce their taxes for individuals next year. Lucerne is also considering similar measures. 

Three Swiss cantons to lower taxes in 2026, more plan to follow

The three Swiss cantons - already known for their low taxation rates - have announced that they plan to further reduce income taxes for individuals from 2026 onwards, blueNews.ch reports. The tax relief is intended to increase the region’s competitiveness and attractiveness to businesses. Canton Lucerne is reportedly also considering similar measures to avoid losing out to the other cantons. 

The cantons argue that the short-term shortfalls in tax revenue would be quickly followed by rising revenues. While families are relieved of a financial burden, they can rebalance work and childcare - that is, work more, earn more, and pay more in taxes. The measures would also attract more companies to set up headquarters, bringing more revenue. 

Low tax policies exacerbate inequality, critics say

However, the move has drawn criticism from some. The Swiss Economic Institute (KOF) at ETH Zurich warned that tax competition was leading to “population segregation”, under which the better-off cantons draw in wealthier residents, while less-well-off cantons take in everyone else. This pushes up the cost of buying a house in poorer cantons. 

At the international level, the aid umbrella organisation Alliance Sud said that Switzerland’s low-tax policy was encouraging tax dumping - where companies’ profits are taxed in Switzerland instead of the countries where they are generated, often drawing much-needed income away from countries, particularly in the global south. 

Despite these concerns, other Swiss cantons still seem to be interested in the benefits of low-tax policies. Aargau, for instance, recently voted in favour of lowering taxes, and Canton Bern is also planning to introduce tax relief in 2026.