Tax Progression

The term progressive tax denotes a system of taxation in which taxpayers with higher incomes or greater wealth are taxed at higher tax rates than taxpayers with less income or wealth. In Switzerland, progressive tax schedules are used for income taxes such as the direct federal tax and capital withdrawal taxes.

Example of a progressive tax regime: Person A has a taxable income of 50,000 Swiss francs and must pay 5000 francs in taxes on that income. Person B has a taxable income of 100,000 francs and must pay 20,000 francs of taxes on that income. That means person A is charged 10% of their income in taxes while person B is charged 20% of their income in taxes. That means person B is paying taxes at a higher rate and is paying a larger portion of their income in taxes than person A. Person B has twice as much taxable income as person A but pays four times more taxes.

Example of a non-progressive tax regime: Person A has a taxable income of 50,000 francs and is charged 5000 francs in taxes. Person B has a taxable income of 100,000 francs and is charged 10,000 francs in taxes. Both person A and person B pay 10% of their income in taxes, but Person B pays a higher amount in taxes because they have a higher taxable income.

More on this topic:
Cold progression
Marginal tax rate explained
Swiss federal income tax calculator

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