Reform of Marriage & Family Taxation - Part 1: Childcare Costs by Third Parties, the Initial Situation

The taxation of marriage and families has undergone several reforms in recent years. Now, two more reforms are being discussed. The first addresses the tax consideration for third-party child care costs, and the second addresses the abolition of the marriage penalty. However, both are controversial. Findea explains these plans in a four-part series of articles. First, the respective initial situation is presented, before the changes and the criticism are introduced. In this first article, the initial situation for the reform of the tax treatment of third-party child care costs is presented.

Initial situation‍

Parents who cannot care for their children alone due to their work have the option to deduct these third-party child care costs from their taxes. This is possible up until the child reaches the age of 14. For direct federal tax, this deduction is currently up to a maximum of CHF 10'100.- per child per year. At the cantonal level, the deduction varies depending on the canton between CHF 3'000.- (Valais) and CHF 19'200 (Fribourg). Especially in families where both parents work, these conditions often mean that a significant portion of the third-party child care costs have to be paid by the parents themselves. This, in turn, incentivizes one parent to work less. To counteract this, the possible maximum amounts of the deductions are now to be increased. This is intended to better reconcile work and family life and to counteract the domestic shortage of skilled workers.

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