The role of Pillar 3a contributions in reducing the tax burden.

Katrin_13

Hi Forum,

my question to you is how significant is the reduction in taxable income when one contributes to Pillar 3a in Switzerland? How do contributions to Pillar 3a help in reducing the tax burden for individuals in Switzerland? This type of contribution is often recommended as a way of reducing your tax bill. In what ways do Pillar 3a contributions impact an individual's taxable income in Switzerland?

thanks in advance

Springe

Katrin_13 Hi,

For example: Income: CHF 100’000
Pillar 3a Contribution: CHF 7’056 (Let's assume you make the maximum allowable contribution for an employee with a pension fund, which is CHF 7’056 (as of 2024)).
You can deduct the full contribution amount of CHF 7’056 from your taxable income.
New Taxable Income: CHF 100’000 - CHF 7’056 = CHF 92’944
To estimate the tax savings, you need to know your marginal tax rate. Let's assume a marginal tax rate of 20% (this can vary based on your canton and municipality).
Tax Savings = Deduction Amount x Marginal Tax Rate= CHF 7’056 x 20% = CHF 1’411.20

PizBuin

The annual premium is deducted from the taxable income, but only up to the legally defined maximum amount. During the term, returns such as interest and surpluses are tax-free. These returns are not directly part of the premium; rather, they accrue separately and are treated independently.