Less tax for Vaud taxpayers!
The canton of Vaud accepts higher health insurance deduction limits for 2020
The Vaud legislature accepted earlier this month an initiative increasing the amount of deductible health insurance premiums which will be in effect as of tax year 2020 (tax return filed in 2021).
The maximum deduction for an adult will be increased to CHF 3’200 (from CHF 2’000 currently) and the maximum deduction for a couple will be increased to CHF 6’400 (from CHF 4’000 currently). Only the actual amount of insurance premiums that have been paid over the year is deductible. This is welcome news to Vaud taxpayers whose tax rates are among the highest in Switzerland.
This increased deduction is part of a larger package of measures related to the future acceptance of Swiss corporate tax reform. Indeed, part of the Federal corporate tax reform measures which have been proposed, consists of a payment of CHF 1 billion to compensate the cantons for losses related to the reduced corporate tax rate. The canton of Vaud hopes to use its share of this payment to partially finance the costs of this tax reduction from increased health insurance premium deductions (estimated yearly cost of CHF 40 million). The Swiss people will be voting whether to accept corporate tax reform on the 19th of May 2019. Irrespective of the outcome of the vote, the Vaud measures will take effect next year.
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