Right now we are facing difficult economic and financial times. As a result, some Swiss cantons are doing away with planned tax cuts or are even considering tax increases. And the Canton of Aargau? The Canton of Aargau will lower taxes once again. This time the cuts are targeting individuals with medium income.
The last time the Canton of Aargau reduced taxes was in 2009. Back then the focus was on lower incomes and medium to upper incomes as well as legal entities. What the government council held out the prospect for at the time is now being debated and working its way through the Grand Assembly: tax relief for the middle class. It will represent an even greater improvement to the already very attractive tax regime in the Canton of Aargau. However, another factor which is just as important as the low tax rates is the healthy financial state of the Canton of Aargau. Despite repeated tax cuts, the canton still has sufficient funds to maintain the other location factors. And no future tax problems are on the horizon, which cannot be said of other cantons.
The focus of tax cuts for the middle class is the reduction of income tax rates and wealth tax rates. Further support will take the form of an increase in the child deduction and the child-care cost deduction. Another important measure is the annual compensation for the cold progression by adjusting essential deductions continuously to inflation for the well-being of the residents in the canton.
During the course of the legislative process another issue was taken up. The taxation of profits for legal entities shall be reduced once more just like in 2007 and 2009, that is in a second step after the tax reductions for natural persons have been put in place. The intention is to lower the bottom tax bracket to 5.5% and the upper tax bracket to 8.5% as well as increase the basic allowance (gains that can be taxed constantly at the lower tax rate) to CHF 250,000.
Three individual measures in detail:
- Income Tax Rate: Married taxpayers with a taxable income of CHF 100,000 shall enjoy a tax cut of about 6%.
- Wealth Tax Rate: Taxpayers with assets of between CHF 100,000 and CHF 250,000 shall have their taxes lowered 16%. Married taxpayers shall now receive an allowance of CHF 200,000 and singles CHF 100,000
- Child Deduction: Taxpayers may now deduct CHF 7,000 for children up to the age of 14, CHF 8,000 for children between the ages of 15 and 18 and CHF 11,000 for adult children still receiving an education.