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Glossary

Tax Progression

Tax Progression describes the structure of tax tariffs under which the rate increases as income rises. Higher incomes are thus burdened proportionally more heavily than lower ones. A distinction is made between the average rate, which reflects the overall burden across income, and the marginal rate, which indicates how much tax falls on the additional franc earned. The income tax tariffs of the Confederation and the cantons are generally progressive.

At a glance

01

Under progressive tariffs the rate rises with income; additional income attracts proportionally more tax.

02

The average rate reflects the total burden, the marginal rate the burden on the last franc earned.

03

Inflation-driven income increases can lead to cold progression; the Confederation has offset this since 2011 with an automatic indexation of the tariff.

Frequently asked questions

The average tax rate indicates what share of total income the tax represents. The marginal tax rate shows how much tax falls on each next franc earned. Because of progression, the marginal rate is higher than the average rate, since every additional portion of income is taxed more heavily than the preceding one.
Cold progression arises when income rises only nominally, that is due to inflation, while real purchasing power stays the same. Through progression the taxpayer nonetheless moves into a higher average tax rate even though their economic capacity has not grown. At federal level this effect has been offset since 2011 by an automatic adjustment of the tariffs to inflation.

Part of the topic

Steuern (privat)

Sources: Eidg. Steuerverwaltung (ESTV) · Systematische Rechtssammlung (fedlex)