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Higher tax deductions for parents in Switzerland starting in 2023

Summary:
This week, Switzerland’s government set a date for the introduction of more generous tax deductions for childcare. © Zsv3207 | Dreamstime.comFrom 1 January 2023, parents will be able to deduct up to CHF 25,000 per child in childcare costs from their annual taxable income, reported RTS. Currently, the maximum is CHF 10,100 per child. The change is the result of a new law that was created in autumn last year. Only external expenses incurred for the care of children under 14 years old will be deductible. The change is expected to reduce tax revenue by CHF 10 million. An earlier attempt to increase the tax deductibility of childcare costs was rejected in a referendum in September 2020. The 2020 package, as well as allowing expense deductions up to CHF 25,000, included a rise in the

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This week, Switzerland’s government set a date for the introduction of more generous tax deductions for childcare.

© Zsv3207 | Dreamstime.com

From 1 January 2023, parents will be able to deduct up to CHF 25,000 per child in childcare costs from their annual taxable income, reported RTS. Currently, the maximum is CHF 10,100 per child.

The change is the result of a new law that was created in autumn last year. Only external expenses incurred for the care of children under 14 years old will be deductible. The change is expected to reduce tax revenue by CHF 10 million.

An earlier attempt to increase the tax deductibility of childcare costs was rejected in a referendum in September 2020. The 2020 package, as well as allowing expense deductions up to CHF 25,000, included a rise in the general deduction for children from 6,500 to 10,000. Some believe it may have been the rising general deductions that led voters to reject the earlier plan.

The 2021 law can no longer be overturned by a referendum as the window for doing so closed on 20 January 2022.

The higher deductions will make it easier for couples with moderate incomes to both work. Paying for childcare out of tax-paid earnings can make working uneconomically viable for some second income earners, particularly in cantons where taxes are high.

However, some couples that have decided sacrifice one career to focus their firepower on one may feel they are subsidising dual income families.

More on this:
RTS article (in French) – Take a 5 minute French test now

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