Marriage penalty is to be abolished

Due to the so-called marriage penalty, married couples are at a tax disadvantage compared to cohabiting couples regarding direct federal tax. This has led to controversies for decades and is also unconstitutional according to the Federal Court. The Federal Council now intends to eliminate it using the "multiple rate with alternative tax calculation" model.

Current Inequality

‍Currently, single parents receive the same tax reduction as married couples with children. However, cohabiting couples with children also benefit from this arrangement, even though their incomes are not combined as in a married couple. As a result, married couples are currently at a tax disadvantage. If this additional burden exceeds 10%, it constitutes unconstitutional unequal treatment according to the Federal Court.

‍Goals of the Revision

‍The Federal Council intends, according to the message to eliminate the marriage penalty, to create a taxation system as neutral as possible towards various family and partnership models. For this, the "multiple rate with alternative tax calculation" model will be introduced. It first calculates the tax burden of married couples within the ordinary joint assessment by adding the two incomes of the couple. Then, a calculation is made that follows the procedure with cohabiting couples: Earned income and pensions, as well as associated deductions, are allocated to the wife and husband according to the actual circumstances as they appear in the tax declaration. The remaining incomes, such as asset earnings, as well as other deductions, are allocated equally. The calculated tax factors for wife and husband are then subject to the basic rate. Subsequently, the amount from the ordinary joint assessment is compared to that of the alternative tax calculation, and the lower amount is charged to the couple. However, this alternative tax burden puts a greater strain on one-earner marriages, for which the Federal Council anticipates a deduction of 8100 Fr. For taxpayers, nothing will change when filling out tax declarations.

Unmarried couples with children, including cohabiting couples, would newly be subject to the basic rate and no longer the married rate. As a result, depending on their income, their tax burden will increase compared to today. However, the Confederation estimates a total of 1.15 billion Fr. less revenue from direct federal taxes.

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