We pay taxes either all at once or in fixed tax installments. Prepaying taxes means voluntarily paying the taxes you expect to pay in advance. Discover why this can be worthwhile for you.
Firstly, you have to pay your taxes anyway and secondly, many cantons pay you a comparatively high interest rate if you pay in advance – more than you can earn on a normal savings account. So voluntary tax prepayment can make sense for you. First, let’s take a look at the four relevant interest rates on which your decision depends.
Bank interest, compensation interest, compensatory interest, default interest, prepayment interest
If you understand what interest you get and what you pay and how much it is, you will quickly understand whether paying tax in advance is worthwhile for you. You can also find the breakdown in table form below.
- Bank interest is the interest you receive on your money in a salary account or savings account. Despite the rise in interest rates, this is still around 0% for the vast majority of banks on a private account.
- Compensatory interest (also known as compensatory interest ) is the interest you receive from the tax authorities if it later transpires that they have overcharged you for taxes. Compensatory interest is tax-free.
- Default interest is the interest you pay to the tax authorities if you do not pay taxes on time. Taxes become due when the invoice is sent. If you do not pay taxes owed despite a reminder, you will be prosecuted. You can deduct the default interest from your tax return as a deduction for interest payments.
- Prepayment interest is the interest that the tax administration pays you on voluntary payments before the installment invoice is due. It works like this: if you have a credit balance in your prepayment account with the tax administration, the installment invoices are covered by this. Interest is paid on your credit balance until this credit is credited. If your prepayment balance exceeds the installment invoices, interest will be paid on any surplus until the end of the year at the latest. The prepayment interest is taxable.
| Interest type | Interest on what? | Who pays whom? | Taxable? |
|---|---|---|---|
| Bank interest | your account balance | Bank → you | Yes |
| Compensation interest | for overcharged taxes | Tax office → you | no |
| Default interest | for taxes not paid on time | you → Tax office | no, but deductible |
| Prepayment interest | on tax payments before the due date | Tax office → you | Yes |
Prepayment interest rate 2025 in various cantons
Incidentally, federal tax is due on March 31 of the following year, which applies throughout Switzerland. In the case of cantonal and municipal taxes, each canton sets its own payment dates, deadlines and interest rates. What they have in common is that no withholding tax is withheld on interest income. In the reference procedure for direct taxes, the Association of Swiss Tax Authorities has compiled, among other things, how taxes are levied, invoiced or reimbursed by the Confederation or canton.
Paying taxes in advance therefore works very differently in the various cantons. This reflects the federal system. The prepayment interest rate differs quite significantly and changes annually.
What is the 2025 prepayment interest rate? What interest on arrears 2025 do I have to pay?
For some populous cantons, you will find the 2024 / 2025 prepayment interest rate and default interest rate in the following table. With the turnaround in interest rates, some cantons have fortunately increased their interest rates for advance payments and some have already lowered them again.
This also applies to the Confederation. In 2025, the Confederation will pay a lower interest rate on advance payments (now 0.75 %) and reduce the default interest rate from 4.75 % to 4.5 %. Although the interest rate for advance payments is now lower, in many cases this interest rate is likely to be higher than the interest rate you get on a normal savings account.
| Canton | Prepayment interest in % | Default interest in % | ||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2023 | 2024 | 2025 | 2022 | 2023 | 2024 | 2025 | |
| Aargau | 0.10 | 0.30 | 0.75 | 0.75 | 5.1 | 5.0 | 5.0 | 5.0 |
| Basel-Stadt | 0.10 | 0.50 | 1.0 | 1.0 | 3.0 | 3.5 | 3.50 | 3.5 |
| Basel-Land | 0.20 | 0.20 | 0.80 | 0.2 | 5.0 | 5.0 | 4.75 | 5.5 |
| Berne | 0.00 | 0.25 | 0.75 | 0.75 | 3.0 | 3.0 | 1.0 | 1.0 |
| Fribourg | 0.00 | 0.00 | 0.25 | 0.25 | 3.0 | 3.0 | 3.75 | 3.75 |
| Grisons | 0.00 | 0.00 | 0.75 | 0.25 | 4.0 | 4.0 | 4.0 | 4.0 |
| Lucerne | 0.00 | 0.00 | 1.25 | 0.75 | 3.5 | 3.5 | 4.75 | 4.5 |
| St. Gallen | 0.25 | 0.25 | 0.25 | 0.75 | 4.0 | 4.0 | 4.0 | 4.0 |
| Solothurn | 0.00 | 0.00 | 0.00 | 0.0 | 3.0 | 3.0 | 3.5 | 3.5 |
| Wallis | 0.00 | 0.00 | 0.00 | 0.25 | 3.5 | 3.5 | 3.5 | 3.75 |
| Train | 0.00 | 0.00 | 2.00 | 2.0 | 4.0 | 4.0 | 4.0 | 4.0 |
| Zurich | 0.25 | 0.25 | 1.00 | 1.0 | 4.5 | 4.5 | 4.5 | 4.5 |
| Covenant | 0.00 | 0.00 | 1.25 | 0.75 | 4.0 | 4.0 | 4.75 | 4.5 |
When is the tax payment due?
The tax administration determines the amount and deadline for the taxes to be paid. The cantonal systems for tax payments, the number and dates of installment invoices and refund regulations differ.
Related content
Tax return deadline extension 2024 per canton
For example, Valais levies five provisional installments, the canton of Bern three (May 20, August 20, November 20). Ticino also levies three installments, but on different dates (May 1, July 1 and September 1). In Zurich, there is a general due date of September 30. There is also a due date in Aargau, but the reference date there is October 31.
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Tips on paying taxes in advance
Canton or not – there are still some general tips for your tax money.
Tip 1: Pay taxes on time
As you always pay higher interest on late payments than you get from the bank, it’s not worth putting off tax installments that are due. Pay on time to optimize your finances.
Tip 2: Pay taxes in advance if there is prepayment interest
Most banks do not pay any interest on private accounts and still pay a measly minimum interest on savings accounts. If you receive a prepayment interest rate from the tax authorities that is higher than the bank interest rate, it makes sense to pay your taxes in advance. Although the prepayment interest rate is low in most cantons, the small optimization is worthwhile. This way you get a little more out of your money.
Tip 3: Plan cantonal and federal tax separately
From the point of view of the tax administration, advance payments for the federal government and the canton go to different accounts. You should therefore plan the expected tax separately for the Confederation and the canton. If you pay too much to the federal government and too little to the canton (or vice versa), this can lead to interest on arrears or zero interest due to overpayment. It makes no sense to pay more tax in advance than you expect to pay in total.
Tip 4: Withholding taxpayers should not pay too little
For taxpayers subject to withholding tax, the withholding tax deducted should ideally cover the tax owed. If too much withholding tax was deducted, you will receive a refund with the refund interest. If too little was deducted, you will receive an additional charge with the higher default interest rate. So make sure that you don’t pay too little, otherwise it will be expensive.
In addition to paying taxes in advance, there are other ways you can optimize your finances by making early payments. Do you know the effect of switching your pillar 3a payments from the end of the year to the beginning of the year?
Mach den ersten Schritt zur finanziellen Unabhängigkeit
In einer Minute siehst du deine Vermögensentwicklung und dein Einkommen während der Rente.
Disclaimer
We have taken great care in compiling the content of this article. Nevertheless, we cannot rule out errors and cannot guarantee that the content is correct, up-to-date or complete. This article does not replace tax advice. We do not offer investment or tax advice and recommend that tax issues are always clarified with a tax expert and/or the relevant cantonal tax authorities. Any liability is rejected.
Last update: 22.03.2025 14:57
