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Important Updates and Tips for Tax Optimization

The 2024 tax year brings some interesting changes. Even though many new rules will only be officially published at the end of the year, it is worth taking a look now. From adjustments in deductions to new rules for retirees and an increase in credit interest for tax prepayments – here are the most important changes at a glance.

Higher Interest on Tax Prepayments

Some cantons are increasing interest rates on tax prepayments in 2024. Those who pay their tax bill early can benefit from better interest. In times of economic uncertainty, this could be an attractive way to plan taxes more efficiently.

Adjustment of Federal and Cantonal Taxes

As every year, the rates and deductions of the direct federal tax will be adjusted for inflation in 2024. This also applies to cantonal and municipal taxes, for example in the canton of Zurich, in order to offset bracket creep.

Higher Deduction for Insurance Premiums

Particularly in the canton of Zurich, there is an interesting change: the deduction for insurance premiums will be increased. At the same time, the previous flat-rate allowance for training costs of CHF 500 will be abolished. However, this allowance had limited significance anyway, as training costs usually had to be substantiated with actual proof.

Abolition of the Imputed Rental Value Deduction

Until now, homeowners in certain cantons such as Zurich could, under certain circumstances, receive a reduction on the imputed rental value. Retirees in particular benefited from this rule to avoid excessive tax burdens on their property. This relief will now be abolished, which could have financial consequences for some households.

More Money for Childcare Costs

Parents who have their children cared for externally can be pleased: the tax deduction for proven childcare costs will increase to CHF 25,000 per child per year. This regulation applies to direct federal tax and especially benefits higher-income families. Experts see this as an important step to support working parents and combat the shortage of skilled workers.

Adjustments to Withholding Taxes

Due to bracket creep and changes in tax rates, there will be adjustments to withholding taxes across all cantons in 2024. Foreign employees without permanent residence permits (C permit) are particularly affected.

Uniform Retirement Age and More Flexible Pensioning

Since the beginning of 2024, Switzerland has had a uniform retirement age of 65 for men and women. In addition, there is now more flexibility in retirement: instead of two, three partial retirement steps are now possible for tax purposes. This allows retirees to draw their retirement benefits in stages.

Another point of the AHV reform concerns the deferral of withdrawing vested benefits. This is now tied to existing employment. Only those who continue to work can benefit from tax advantages. At the same time, retirees remain at a disadvantage tax-wise, as their pension income is fully taxed while they can only claim limited deductions.

Pension Supplements for the Transitional Generation

Women approaching retirement will receive lifelong pension supplements as compensation for the higher retirement age. This affects nine cohorts (1961–1969) and is intended to offset the financial impact of the pension reform.

Tax Tips for 2024

• Meet deadlines – otherwise estimates may be imposed
• Check actual maintenance costs (not lump sums)
• Properly declare foreign assets
• Don’t forget membership fees & interest expenses
• Professional tax advice often saves more than it costs

Conclusion

The 2024 tax year brings many changes that affect both individuals and businesses. Early planning can help take advantage of financial benefits and avoid unnecessary costs. Those who prepare well can benefit from the changes and make the most of tax advantages.