Individual Taxation: Do High Earners Benefit? (And Why Occupational Pension Buy-Ins Change the Picture)

By Luigi Galante, Financial and Tax Advisor
Founder of Elite Office SA and the Elite Fondations pension institutions

On 8 March 2026, Switzerland will vote on the federal law introducing individual taxation. In practical terms, this would mean moving from a system in which married couples are taxed jointly to one in which each individual is taxed separately, as is already the case for unmarried couples.

Before comparing tax amounts, it is essential to understand an important mechanism of the current system. Today, when the spouse earning the lower income increases their employment rate (for example, from 50% to 80%), their additional income is added to the household's total income, potentially pushing the couple's combined income into higher tax brackets. This can result in taxation at a high marginal tax rate. In other words, a significant portion of the additional income may be heavily taxed.

In practice, this additional tax burden can sometimes be substantially reduced, or even fully offset, through effective tax planning, particularly by making voluntary buy-ins into an occupational pension scheme (BVG / second pillar).

Why does this work?
 

ecause an occupational pension buy-in is generally deductible from the couple's combined taxable income. In other words, if the household has available buy-in capacity (a pension shortfall) and faces a high marginal tax rate, the buy-in can significantly reduce the couple's taxable income in the year of payment.

With individual taxation, this existing mechanism will change the incentives within certain couples. The tax "value" of a pension buy-in will depend more heavily on which spouse has the higher taxable income, rather than on the couple's overall tax position.

Three additional practical factors, often overlooked but nevertheless decisive, must also be considered:

• The child deduction for direct federal tax would increase from CHF 6,800 to CHF 12,000 per child to compensate for the change in the taxation system.
• The tax brackets would be adjusted to distribute the impact of the reform more evenly across income groups.
• Income and assets would be allocated according to civil law ownership rules.

In other words, the question goes beyond "marriage versus cohabitation". What really matters is your household's income structure and financial circumstances: Two similar incomes? A single income? Very unequal incomes? Several children?

The tables below illustrate typical scenarios. Their purpose is educational: to understand where the reform would genuinely change the tax bill, and why.

I. Two High and Similar Incomes

Case A — Married, 2 children: CHF 200,000 / CHF 150,000 (mortgage interest CHF 15,000)

If your household has two well-paid incomes, this is generally where individual taxation can make a noticeable difference.
 

Key takeaway: With two high incomes, separating the incomes reduces the impact of progressive taxation. This is typically where significant differences can be observed. The proposed adjustment to the tax brackets aims to distribute the impact more evenly, but the fundamental mechanism remains the same: taxing two high incomes separately rather than adding them together.

Case B — Married, 2 children: CHF 250,000 / CHF 250,000 (mortgage interest CHF 15,000)

This is a symmetrical high-income scenario: two identical and substantial incomes. This household profile is often presented as one of the most affected by the current system of combining spouses' incomes.
 

Key takeaway: When both incomes are high and similar, the financial impact of individual taxation is often particularly significant in absolute Swiss franc terms. This also helps explain the perception that the reform mainly benefits high earners, as the differences become especially visible at these income levels.

II. Equal but Low Incomes

Case C — Married, 2 children: CHF 50,000 / CHF 50,000 (no impact)

This example challenges a common assumption: "If both spouses work, they automatically benefit." Not necessarily, especially at lower income levels.
 

Key takeaway: In this case, the reform makes no practical difference. Direct federal tax is already very low (or reduced to zero), and switching to individual taxation does not automatically generate tax savings. This is precisely why many lower-income households will experience little impact from the reform.

III. Highly Unequal Incomes

Official explanations emphasise a simple principle: similar incomes generally lead to lower direct federal tax, while highly unequal incomes generally lead to higher direct federal tax.

Case D — Married, 2 children: CHF 25,000 / CHF 125,000 (mortgage interest CHF 10,000)
 

How to interpret this case: This example illustrates a somewhat counterintuitive mechanism: almost the entire tax burden falls on the main earner, while the spouse with the much lower income can no longer provide much of a balancing effect. This is often where households may feel disadvantaged by the reform.

Case E — Married, 2 children: CHF 25,000 / CHF 475,000 (mortgage interest CHF 15,000)
 

Commentary (Case E): This is an extreme but useful example: the greater the income gap, the more the system effectively places the entire tax burden on one person. This reinforces the idea that individual taxation may be disadvantageous for couples with highly unequal incomes.

Case F — Married, 2 children: CHF 50,000 / CHF 100,000 (mortgage interest CHF 10,000)
 

Commentary (Case F): Here, the difference is small. This is a mixed-income household where the reform is close to tax-neutral. This is important: there is no single outcome. Everything depends on both the level of income and the difference between the spouses' incomes.

What about single-income couples?
 

When one spouse earns all, or almost all, of the household income and the other earns nothing, individual taxation is less favourable. The tax burden is concentrated on one person, while some of the tax mechanisms available to married couples disappear.

IV. Tax Deductions (Occupational Pension Buy-Ins) and Wealth Allocation

An important but often overlooked aspect of the individual taxation debate concerns how assets, the income they generate, and related expenses would be allocated under an individual taxation system.

Under the new system, married couples would be treated in the same way as unmarried couples. Income and assets would be allocated according to civil law rules.

In practice, this means that legal ownership becomes decisive. In other words, the person who legally owns an asset is also the person who declares the corresponding income and benefits from the associated tax deductions. This may seem technical, but it can have significant tax consequences.

Why are occupational pension buy-ins central to the debate?
 

Voluntary buy-ins into an occupational pension scheme (second pillar) are generally deductible from taxable income. However, a deduction is only valuable if the individual has sufficient taxable income and a significant marginal tax rate. The higher the marginal tax rate, the greater the tax benefit of the deduction. 

• Under the current joint taxation system, spouses' incomes are combined. An occupational pension buy-in made by either spouse reduces the household's total taxable income and can offset part of the progressive taxation effect caused by the second income, potentially even beyond that.
• Under individual taxation, an occupational pension buy-in will primarily benefit the spouse with the higher taxable income. If the other spouse earns little, they will have little tax liability to reduce. The compensating effect of this planning tool will therefore be smaller, or even negligible.

The risk of tax-driven wealth allocation (a plausible scenario)

If income and wealth are allocated according to civil law ownership rules, the question of ownership becomes central.

In some cases, a higher-earning spouse might be tempted to concentrate certain assets and/or the income generated by those assets in their own name, even if this means paying more tax on that income!

Why would someone do this?
 

Quite simply, to maximise the use of personal tax deductions, such as occupational pension buy-ins.

Indeed, only individuals with pension shortfalls can make voluntary buy-ins. Furthermore, buy-in capacity tends to be greater when employment income is substantial.

Concentrating income in the hands of the higher-earning spouse may therefore help optimise the use of these deductions.

However, this tax logic may have an unintended consequence. It could lead to greater individualisation of wealth within the couple, with the risk that the lower-earning spouse accumulates fewer assets in their own name.

Switzerland has certain safeguards, including matrimonial property law and the division of occupational pension assets in the event of divorce. However, these safeguards do not eliminate all inequalities in financial control within a couple's everyday life.

Beyond the question of "who pays less tax", individual taxation could therefore change how income, assets and tax deductions are distributed within a couple — an issue that has received relatively little attention in public debate.
 

V. Pros and Cons: What the Examples Suggest

Arguments in favour (3 points)
 

• Consistent taxation regardless of marital status: Married and unmarried couples with comparable incomes would be subject to a more consistent and uniform tax treatment. This would reduce differences arising solely from marital status.
• Less impact from combining incomes when both spouses earn well: For couples in which both spouses earn high and similar incomes, combining their incomes quickly increases the impact of progressive taxation. Taxing incomes separately limits this effect and can significantly reduce the tax bill.
• Greater transparency over who pays what: Each individual is taxed on their own income. This principle is often perceived as clearer and more logical (one adult = one individual tax assessment), although certain rules governing deductions will still need to be clarified.

Arguments against / Open questions (3 points)
 

• Limited impact on lower-income households:

  At lower income levels, even when both spouses earn similar amounts, the effect is often small or non-existent. Many households will therefore see no meaningful change.

• Risk of higher taxation for single-income couples (or couples with very unequal incomes):

  When one spouse earns all or almost all of the income and the other earns very little, the tax burden is concentrated on one individual and may become higher than under the current system.

• Unintended consequences for deductions and asset ownership:

  Large tax deductions (such as occupational pension buy-ins) are particularly advantageous for individuals with high taxable incomes.

  If income and assets are allocated according to civil law ownership rules (sole ownership or co-ownership), this could encourage couples to concentrate income, deductions or assets in the hands of the higher-earning spouse, potentially increasing financial imbalances within the couple.

Conclusion

The examples show that, for households with modest incomes, the impact on direct federal tax is often limited, even when both spouses earn similar amounts. For families with children, the impact may sometimes be zero.

Conversely, when both incomes are high and similar, the effect can be substantial.

Beyond tax brackets, personal deductions (particularly occupational pension buy-ins) and wealth allocation must also be part of the discussion.

If income and assets are allocated according to civil law rules, the reform may influence ownership decisions and financial planning within couples, potentially increasing wealth imbalances.
 

One essential point must not be overlooked: this entire document deals exclusively with direct federal tax.
 

For most taxpayers, cantonal and municipal taxes often account for the largest share of their overall tax burden.

At this stage, the full implications at cantonal and municipal levels (tax brackets, deductions, implementation arrangements and harmonisation) are not yet known.

There is a risk that savings achieved on direct federal tax could be partially or even entirely offset by cantonal and municipal adjustments designed to maintain tax revenue levels.

From this perspective, some see a risk of giving the authorities a "blank cheque": voting on the principle on 8 March 2026 without having a complete picture of how the reform would be implemented across cantons and municipalities.