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Tax reduction in the canton of Zurich: Lower taxes – but by how much exactly? Or why it is less than 3%.
Tax reduction in the canton of Zurich: Lower taxes – but by how much exactly? Or why it is less than 3%.
Shortly before the end of the year, the Zurich Cantonal Council decided on a temporary reduction in the cantonal tax rate. From 2026, this will fall from 98% to 95% for an initial period of two years. Public debate often refers to this as a "3% tax cut." This statement is politically appealing, but only partially meaningful in terms of taxation. How much less tax will actually have to be paid?
What was decided
The cantonal tax rate applied to the so-called simple state tax will be reduced by three percentage points. The decision will initially apply for the next two years.
Why not just reduce taxes by 3%?
The tax rate is merely a multiplier within the overall tax calculation. A reduction in the tax rate of three percentage points therefore does not mean that the effective tax bill will also be reduced by 3%. What is more important is how significant the cantonal share of the overall tax burden is.
Specific numerical example (excluding direct federal tax)
A natural person with a taxable income of CHF 150,000 (single, basic tax rate, no assets, no religious affiliation, city of Zurich) paid a total of CHF 24,290.95 in state and municipal taxes in 2025. This breaks down as follows (excluding personal income tax):
· Simple state tax: CHF 11,194.00
· Zurich state tax: CHF 10,970.10 (98% of the basic state tax)
· Municipal tax for the city of Zurich: CHF 13,320.85 (119% of the basic state tax)
Under the same conditions, the same individual will pay a total of CHF 23,955.15 in state and municipal taxes in 2026 (without taking into account the adjustment of the tax structure due to the adjustment for bracket creep). This is broken down as follows (excluding personal income tax):
· Simple state tax: CHF 11,194.00
· Zurich state tax: CHF 10,634.30 (95% of the basic state tax)
· Municipal tax for the city of Zurich: CHF 13,320.85 (119% of the basic state tax)
The effective tax reduction in this example is therefore CHF 335.80, which corresponds to around 1.38% of the original tax burden (not including direct federal tax) and thus not 3%. The percentage varies slightly depending on the municipality of residence, as municipal tax may have a different weighting in relation to cantonal tax than shown.
Conclusion
The tax reduction in the canton of Zurich is real and noticeable—but less spectacular than the term "3% tax reduction" suggests. In practice, depending on income and living situation, this results in a reduction of around 1.4% in state and municipal tax burden.