The deduction of interest changed status in Switzerland after the vote on September 28, 2025. The principle is now clear: the deduction of private passive interest will 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. A private loan, a card balance, or a family loan could truly 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 shifts. The abolition of the rental value comes with the abolition of the deduction of private mortgage interest. In other words, the old tax 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: the interest paid should no longer be deductible.
- Credit card debit balance: same logic, if you carry over a balance.
- Bank overdraft: overdraft interest is also covered.
- Lombard loan: it falls within the scope of private interest expenses.
- Or private lending or 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 (LCC) also remains unchanged. Swiss consumer protection, solvency, and consumer credit regulation rules stay in place. Therefore, risk control and standard checks 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 deduction of passive interest.
Exceptions for Swiss taxpayers to know
The reform is not uniform. Two exceptions must be known. The first concerns first-time buyers of a primary residence. The second targets owners of rental properties.
These cases remain specific, however. They should not blur 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 review costly debt. Waiting until the last minute can reduce room to maneuver.
In Switzerland, the transition period before the reform comes into effect is a strategic moment to compare refinancing, reduce costly debt, and place the APR back at the center of any private credit decision.
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.
- Household that carries credit card balances.
- 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 the Interest deduction It is not only measured in theory: it translates into a very real extra cost for 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: effective annual interest rate of 8.9% (Q1 2017), with constant monthly payments of approximately $497 (Q1 2014). The total interest paid over 4 years amounts to 3,842 1Q14.
| Situation | Tax savings | Actual cost of interest | Difference |
|---|---|---|---|
| Before the reform (marginal rate 25% in Q1 2017) | 960 CHF | 2,882 1Q14 | reference |
| After reform (any tranche) | 0 CHF | 3,842 1Q14 | +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 1Q14 |
| Geneva, Neuchâtel, Basel-City (high) | ~38 % | −1,460 1Q14Q |
Case 2: Credit card balance of 5,000 CHF over one year
Assumption: the maximum legal interest rate applicable to credit cards in 2026, i.e., 12.1% p.a. (the cap set by the LCC ordinance).
| Situation | Annual interest | Tax savings | Actual cost |
|---|---|---|---|
| Before the reform (marginal rate 25% for %) | 600 CHF | 150 CHF | 450 CHF |
| After reform | 600 CHF | 0 CHF | 600 CHF (+33 %) |
Balance carryover, already one of the most expensive forms of financing in Switzerland, is losing its last tax break. For a borrower in a high-tax canton (marginal tax rate of 38%), the annual additional cost amounts to 228 per 5,000 in carried-over balance.
Case 3: A family loan between spouses of 15,000 CHF over 5 years at 2.5 %
Assumption: amortizing repayment, total interest of approximately 967 CHF over time. A special feature of loans between individuals: the deduction of interest acted at both ends of the relationship.
| Position | Before reform | After reform |
|---|---|---|
| Borrower — deduction of interest paid (marginal 25 %) | −242 CHF in taxes | 0 |
| Lender — Taxation of Interest Received (Marginal 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 1Q17) | Additional cost in high-tax districts (38Q1-Q17) |
|---|---|---|
| Personal loan: 20,000 (1-year term, 14 monthly payments) / 48 months | +960 CHF | +1,460 1Q14 |
| Card balance: 5,000 CHF / 1 year | +150 CHF | +228 CHF |
| Family loan: 15,000 (1-year term, 14 installments) / 5 years | +242 CHF (home) | +367 CHF (home) |
The findings are consistent: the elimination of the interest deduction represents between 20% and 38% of the actual additional cost 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—an effect that, paradoxically, 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 advantage 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 comparing 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 now before 2028
- Check if your current credit is based on a tax benefit that will disappear.
- Consider refinancing if rates remain 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, or purchase deferral.
- 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.
How to anticipate the real increase in the cost of credit in Switzerland
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 can help you make a calm and informed decision. It allows you to compare refinancing, partial repayment, or the search for a better effective interest rate. This is precisely the approach you need to understand your current situation 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.
Conclusion
The deduction of private interest expenses should disappear for the majority of Swiss taxpayers. The change will only take effect in 2028 at the earliest, but the anticipation phase is already beginning. From now on, the interest 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 the entry into force.
