From next year, families and retirees in Switzerland will benefit from higher pensions and greater financial allowances, the Federal Council has confirmed. People across the alpine nation will also be able to take advantage of changes to the tax system, but only from 2026.

Changes to Swiss pensions and family allowance explained

On August 28, the government announced new changes to taxes, pensions and social security in Switzerland. These modifications are designed to ease the financial burden, at a time when Swiss salaries are only just starting to catch up with inflation.

Here's what you need to know about the changes:

First pillar pensions (AHV) and disability allowance payments (IV) to rise

First, the Federal Council confirmed that pension and disability insurance (IV) payments will increase from 2025. Every two years the government is required to analyse consumer indexes, to make sure that both pensions and disability insurance rise in line with inflation.

From next year, the minimum monthly first pillar pension (AHV / OASI) and disability insurance will rise by 35 francs to 1.260 francs. All pensioners will see their AHV payments rise by 2,9 percent, with maximum pensions going from 2.450 to 2.520 francs a month. 

This increase will apply automatically, starting from the first payment in 2025.

When will Swiss pensioners get a 13th month of AHV?

What's more, all retirees will soon benefit from dramatically higher pensions, thanks to the passing of the 13th month of AHV referendum in March 2024. With the government required to implement the initiative by 2026, pensioners will be given at least a 1.260 franc annual boost by the end of next year.

Swiss family allowance to be increased

2025 will also see an increase in the Swiss family allowance. This payment is offered to all working families with dependent children up to 16 years old, and up to 25 years old if the child is still in higher education.

While it is up to individual Swiss cantons to determine the size of the family allowance, the federal government does set the minimum amount that each region must offer. For the first time since the scheme was introduced in 2009, the Federal Councill will raise this statutory minimum.

The increase will raise the minimum child allowance by 7,1 percent, from 200 to 215 francs a month per child. For children and dependents in training, the minimum monthly allowance will increase from 250 to 268 francs.

Changes to taxes in Switzerland: What taxpayers need to know

Also next year, the government will be adjusting federal income taxes and tax deductions in Switzerland. The Federal Department of Finance explained that these measures are designed so that people whose real wages have not risen will not end up paying more in tax.

Swiss federal income tax brackets to be raised

First, all tax brackets for federal income tax will be moved upwards, meaning tax rates for all salaried workers will decline. For instance, married couples will only start to pay federal income tax once they earn a combined income of more than 29.700 francs a year, up from 29.300 francs. The maximum rate for married couples will apply to any earnings above 940.900 francs a year, up from 928.700 francs.

The same is true for individuals, with the tax-free allowance for federal tax rising to 15.200 francs a year. The top rate of tax for single filers will also rise, to 793.300 francs.

Swiss workers to benefit from better tax deductions

Finally, certain tax deductions will also be changed next year. The allowance granted to those with children or dependents will rise from 6.700 to 6.800 francs a year. In addition, those in training or at university will be able to deduct up to 13.000 francs from their annual income when calculating federal income tax, up from 12.900.

When will reforms to Swiss taxes take place?

While pensioners and those on disability insurance will benefit from the higher payments from next year, the changes to federal taxes and tax deductions will only apply from the 2025 tax year. This means that you will only see your bills fall when tax returns are completed in 2026.