Tax glossary
Marginal tax rate (Grenzsteuersatz)
The marginal tax rate is the share of tax you pay on the next franc you earn — or save on the next franc you deduct; because of progression, it is always higher than your average tax rate.
Swiss income tax is progressive: the higher your taxable income, the higher the rate on the top slice. The marginal tax rate describes exactly that rate on the last franc. It answers the question: how much extra tax do I pay if my income rises by CHF 1,000 — and how much do I save if it falls by CHF 1,000?
The average tax rate, by contrast, is your total tax divided by your taxable income. It is useful for knowing your overall burden, but misleading for decisions. Someone with an average rate of 15 percent can easily have a marginal rate of 30 percent.
In Winterthur, the marginal rate has three components: cantonal and municipal tax (the simple cantonal tax multiplied by the canton's, the city's and, if applicable, the church's multipliers) plus direct federal tax. For middle incomes it typically lies between 20 and 30 percent, and considerably higher for high incomes. Federal tax alone reaches a rate of 11.5 percent on very high incomes.
What you need your marginal rate for
Any tax decision involving additional income or additional deductions should be calculated with your marginal rate.
- The value of a pillar 3a contribution or a pension fund buy-in
- Whether a higher work percentage pays off — what is left of the extra salary?
- The effect of a bonus or one-off payment
- Comparing deductions: actual professional expenses instead of the flat rate
- Planning property maintenance over several years
Cantonal and federal scales work differently
The Zurich scale rises fairly evenly in steps. The federal scale is very mild on low incomes and climbs steeply in the middle to upper ranges. As a result, the federal marginal rate can briefly exceed the final rate of 11.5 percent in certain income bands before levelling off.
In addition, married couples and single parents are taxed on a different scale from single people. The same deduction is therefore worth a different amount to a family than to a single person with the same income.
- Single people: basic scale (Grundtarif)
- Married couples and single parents in Zurich: married scale (Verheiratetentarif)
- Federal tax: married scale, plus a reduction of the tax bill per child for parents
Limits of the concept
The marginal rate only holds for smaller changes. With large deductions — such as a CHF 100,000 pension fund buy-in — income drops through several brackets, and the average saving is lower than the starting marginal rate. That is why large deductions are best spread over several years. Taxable income also affects other things such as health insurance premium subsidies or nursery fees, which the marginal rate does not capture.
Example: pillar 3a and a pay rise
A single teacher in Winterthur with a taxable income of CHF 85,000 pays around 15 percent of her income in tax overall — that is her average rate. Her marginal rate, however, is around 25 percent.
If she pays CHF 7,258 into pillar 3a, she therefore saves not 15 percent of it (about CHF 1,090) but around 25 percent, roughly CHF 1,815. Calculating with the average rate underestimates the benefit by almost half. The same logic works in reverse for a CHF 5,000 pay rise: about CHF 1,250 of it goes in tax — not CHF 750.
Frequently asked questions: Marginal tax rate (Grenzsteuersatz)
How do I find out my marginal rate?
The easiest way is the Canton of Zurich's online tax calculator: work out the tax on your income, then on CHF 1,000 more. The difference divided by 1,000 is your marginal rate. We calculate it for you with every tax return we prepare.
Can a pay rise leave me worse off?
Not through tax alone — the marginal rate is always well below 100 percent. But income-dependent benefits such as premium subsidies or reduced nursery fees may fall away, which can shrink the effect noticeably.
Why is the marginal rate in Winterthur higher than in neighbouring municipalities?
Because the City of Winterthur's municipal tax multiplier is higher than in many surrounding municipalities. The cantonal scale is the same everywhere; the multiplier differs.
Related terms
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