Interest deduction changed status in Switzerland after the vote on September 28, 2025. The principle is now clear: the deduction of private passive interest must disappear for the majority of taxpayers, with an entry into force in 2028 at the earliest. This reform stems from the new system linked to the abolition of the imputed rental value. For Swiss households, the issue is very concrete. Private credit, a credit card balance or a family loan could actually cost more tomorrow. It is therefore necessary to understand the legal framework and then measure the impact on the budget.
Deduction of interest after the vote on September 28, 2025: what's changing in Switzerland
Before the reform, the Swiss system was based on a known balance. The rental value was taxed. In return, certain passive interest and certain expenses could be deducted. This mechanism primarily concerned real estate, but not exclusively.
After the 2025 vote, the principle is reversed. The abolition of the rental value is accompanied by the abolition of the deduction of private passive interest. In other words, the old fiscal exchange disappears. This applies at the Swiss level, even if the precise timeline still depends on implementation.
Therefore, two stages must be distinguished. First, the constitutional reform was accepted. Then, its effective implementation will occur later. This nuance is important for credit decisions made between 2026 and 2027.
Which credits remain affected by the end of interest deductibility
The reform doesn't just target mortgages. It affects private passive interest more broadly. This is the point that many readers still underestimate.
- Personal loan or private credit: interest paid should no longer be deductible.
- Debit balance of credit card same logic if you carry over a balance.
- Bank overdraft: overdraft interest is also covered.
- Lombard loan: it falls under private interest expenses.
- Ready between individuals family loan: the implicit tax advantage also disappears.
Many still think that only housing-related loans are affected. In reality, the end of interest deductibility also affects financing for daily expenses or cash flow.
What does not disappear with the reform
The reform does not eliminate everything. First, it is necessary to distinguish between the deduction of interest and the deduction of debts for wealth tax. This latter logic does not automatically disappear.
Then, interest income remains taxable for the lender. A relative who receives interest on a family loan must therefore continue to declare it according to the applicable rules.
The Swiss Consumer Credit Act also does not change. Swiss consumer protection, solvency, and regulatory rules consumer credit remain in place. Risk control and customary checks therefore remain essential.
Finally, one must not confuse Credit and leasing. Leasing does not operate on the same tax logic. Therefore, it is not affected in the same way by the end of the deductibility of interest expenses.
Exceptions for Swiss taxpayers to know
The reform is not uniform. Two exceptions should be known. The first concerns first-time buyers of a principal residence. The second targets owners investment properties.
However, these cases remain specific. They should not confuse the reading of a tenant with private credit or a household with a personal loan. For these profiles, exceptions rarely offer useful protection.
Therefore, a hasty conclusion must be avoided. The exceptions to interest deduction mainly concern certain real estate situations, not ordinary private loans.
When does interest deduction disappear in reality
The disappearance does not apply immediately. A transitional period exists. The entry into force is announced for 2028 at the earliest. Until then, credits already in progress will continue to operate within the current framework.
This window is strategic. The years 2026 and 2027 can be used to compare offers., refinance a loan, or see again This costly. Waiting until the last moment can reduce room for maneuver.
In Switzerland, the transition period before the reform comes into effect is a strategic time to consider refinancing, reducing costly debt, and putting interest rates back at the center of all private credit decisions.
Why the real cost of credit will increase for many households
Until now, some borrowers have reasoned in terms of net after-tax cost. Tomorrow, this reasoning will lose its value. Without the deduction of interest, the real cost of credit will approach the nominal cost paid to the bank or lender.
The effect will be more visible for households that actually deducted their interest. The impact will vary depending on the canton, taxable income, and type of loan. Personal loans, card balances, and certain loans between individuals will often be the most sensitive.
Most Exposed Profiles to Real Appreciation
- Tenant with a private credit file currently open.
- Cleaning that carries over credit card sales.
- Borrower with a paid family loan.
- Owner not letting, who thought to retain a large tax advantage.
- Independent or retired with a tax-sensitive debt structure.
Deducting interest: numerical examples before and after the reform
The end of interest deductibility is not just theoretical: it translates into a very real additional cost on every franc borrowed. Here are three typical cases calculated according to 2026 market conditions and average tax rates in Switzerland, to make the impact tangible.
Case 1: Personal loan of 20,000 at 1% APR over 48 months
Assumption: Annual percentage rate of 8.91% (Q1 2017), with constant monthly payments of approximately 497 CHF (Q1 2014). The total interest paid over 4 years amounts to 3,842 CHF (Q1 2014).
| Situation | Tax savings | Actual cost of interest | Difference |
|---|---|---|---|
| Before the reform (marginal rate 25%) | 960 CHF | 2,882 CHF | reference |
| After reform (any tranche) | 0 CHF | 3,842 CHF | +960 CHF (+33%) |
The magnitude of the loss depends heavily on the canton of residence, as marginal tax rates vary considerably from one region to another.
| Cantonal Profile | Estimated marginal rate | Lost deduction economics |
|---|---|---|
| Zug, Schwyz, Nidwalden (low taxation) | ~22% | −845 CHF |
| Vaud, Bern, Fribourg (median) | ~30% | −1,153 CHF |
| Geneva, Neuchâtel, Basel-City (high) | ~38% | −1,460 CHF |
Case 2: Credit card balance of 5,000 CHF over one year
Assumption: maximum legal interest rate applicable to credit cards in 2026, i.e. 12% (cap set by the CCA ordinance).
| Situation | Annual interest | Tax savings | Actual cost |
|---|---|---|---|
| Before the reform (marginal 25%) | 600 CHF | 150 CHF | 450 CHF |
| After reform | 600 CHF | 0 CHF | 600 CHF (+33%) |
Balance carry-forward, already one of Switzerland’s most expensive forms of financing, loses its last tax cushion. For a borrower in a high-tax canton (38% marginal rate), the additional annual cost reaches 228 CHF for every 5,000 CHF of carried-over balance.
Case no. 3: family loan between spouses of CHF 15,000 over 5 years at 2.5%
Assumption: amortizable repayment, with total interest of approximately 967 CHF over the term. A distinctive feature of loans between relatives: the interest deduction applied to both parties in the transaction.
| Position | Before reform | After reform |
|---|---|---|
| Borrower — deduction of interest paid (marginal 25%) | −242 CHF in taxes | 0 |
| Lender — Taxation of Interest Received (code 25%) | +242 CHF tax | +242 CHF tax |
| Household tax balance | 0 (neutral) | +242 CHF load |
As long as the borrower deducted what the lender declared, the transaction remained tax-neutral for the family as a whole. With the reform, the asymmetry becomes permanent: the interest received remains taxable for the lender (Art. 20 para. 1 let. a of the Federal Act on Direct Taxation), but no longer generates any deduction for the borrower. Loans between relatives thus mechanically become more expensive for the household as a whole, which could encourage a preference for either donations or unpaid advance inheritances.
Cross-cutting lecture: How much does the end of the deduction cost?
| Credit type | Average actual additional cost (marginal 25%) | Additional cost in high-tax districts (38%) |
|---|---|---|
| Personal loan 20,000 CHF / 48 months | +960 CHF | +1’460 CHF |
| Card balance: 5,000 CHF / 1 year | +150 CHF | +228 CHF |
| Family loan 15,000 CHF / 5 years | +242 CHF (home) | +367 CHF (home) |
The findings are consistent: the elimination of the interest deduction results in an actual additional cost of between 20% and 38% of total interest paid, depending on the canton of residence and the borrower’s income. The higher the marginal tax rate, the greater the impact of the reform. Paradoxically, this effect penalizes households in high-tax French-speaking and urban cantons more than those in low-tax German-speaking cantons.
The effective rate becomes the central benchmark for comparing a loan
After the tax benefit ends, the rate becomes the best practical benchmark. It allows you to see the effective annual cost, not just an advertised rate. This is essential for Compare credit offers in Switzerland.
With the gradual disappearance of the deductibility of private passive interest, a loan will no longer have to be evaluated on a presumed tax advantage, but on its real cost, its duration, and its ability to remain bearable in the household budget.
You also need to look at the total cost. A lower monthly payment can hide a longer term and a heavier final bill. Fees, any insurance, and repayment terms also matter. In this new context, comparing on a gross and neutral basis becomes the right method.
What to do from now until 2028:
- Check if your current credit is based on a tax benefit that will disappear.
- Study Refinancing if the rate remains high.
- Evaluate an early refund if the total cost becomes too heavy.
- Compare the offers based on the rate and the total remaining balance.
- Review the arbitration between credit, leasing purchase report.
- Re-examine peer-to-peer lending without tax bias.
The higher the cost of credit, the more useful a quick comparison can become. In some cases, waiting until 2028 may prove to be more expensive than anticipated.
And how to anticipate the real increase in the cost of your credit:
To correctly anticipate the end of interest deductions, you need to simulate your real situation. The correct calculation depends on the amount borrowed, the duration, the interest rate, and your tax profile. The canton can also change the outcome.
Expert guidance then helps to calmly arbitrate. It allows for the comparison of refinancing, partial repayment, or the search for a best effective rate. This is precisely the approach needed to understand the situation today and make a decision before 2028. With this in mind, Lica can help Swiss borrowers calculate the true cost of their loan and choose the most sensible solution.
Our conclusion on interest deduction from January 2028
The deduction of private interest expenses should disappear for the majority of Swiss taxpayers. The change will only take effect at the earliest in 2028, but the anticipation phase is already beginning. From now on, the rate and the actual cost become the key benchmarks. For many households, the real issue is no longer just fiscal. It is also budgetary and decision-making. It is therefore better to measure one's exposure now and make decisions before implementation.
