Vaud Tax Barometer – the “12%” initiative to ease the tax burden for many taxpayers

In 2025, the canton of Vaud’s tax revenues amounted to CHF 7.26 billion, representing 58% of total cantonal revenues, which stood at CHF 12.55 billion. Around 71% of tax revenues came from individuals, 14% from legal entities and 15% from other taxes, notably real estate capital gains tax, transfer duties, inheritance tax and gift tax.

With a maximum income tax rate of 41.5%, the canton of Vaud ranks third-highest in Switzerland in 2026. Only Geneva (43.2%) and Basel-Landschaft (42.2%) apply higher rates. The Swiss average stands at 33.0%.

“Although the canton of Vaud has taken initial steps to ease the tax burden, intercantonal comparisons nevertheless show that, for most of the income and wealth levels analysed, the tax burden in Vaud remains among the highest in Switzerland,” says Janick Pochon, Head of Corporate Tax for the canton of Vaud at KPMG Switzerland.

The canton has gradually reduced its basic cantonal income tax — by 3.5% in 2024, then by 4% in 2025. The reduction was increased to 5% in 2026 and will reach 7% from 2027 onwards. The 12% initiative, which will be put to a vote on 27 September 2026, provides for a 12% reduction in the basic cantonal income and wealth tax for individuals from 2027, without affecting the municipal share of these taxes. If accepted, the 12% reduction applicable to income tax would not be added to the 7% reduction already adopted, but would replace it.

Calculations for various income, wealth and household-composition scenarios show that the initiative would lower the overall tax liability for households — particularly those in the middle-income bracket — and improve the canton’s position relative to other cantons.

For a married couple with two children living in Lausanne, the effective tax rate would fall from 6.08% to around 5.75% for a gross income of CHF 100,000, and from 18.10% to around 17.31% for a gross income of CHF 250,000. Vaud would gain four and two places respectively in the intercantonal ranking, moving from 24th to 20th position in the first scenario and from 22nd to 20th in the second.

For a single person living in Lausanne with a gross income of CHF 80,000, the effective rate would fall from 14.89% to around 14.14%, and for a gross income of CHF 100,000, from 16.83% to 16.00%. In both scenarios, Vaud would move from 25th to 21st place in the intercantonal comparison.

Philippe Miauton, Director of the CVCI, highlights the growth in Vaud’s tax revenues, which should encourage the canton of Vaud to strengthen its competitiveness relative to other Swiss cantons. This applies both to businesses, which expect cantonal measures in the context of the OECD minimum taxation rules (Pillar 2 reform, known as GloBE), and to individuals. “Indeed, the KPMG Vaud Tax Barometer clearly shows that hundreds of thousands of taxpayers would see their purchasing power increase thanks to the 12% initiative. This reduction in cantonal tax would also allow the canton to move up several places in the cantonal tax-attractiveness rankings. This is an important factor in convincing new companies, their executives and employees to establish themselves in Vaud,” says Philippe Miauton.

The canton of Vaud’s maximum corporate income tax rate stands at 14.72% in 2026, slightly above the Swiss average of 14.43%. A rate of 14.0% continues to apply to profits up to CHF 10 million; above this threshold, the progressive scale introduced in 2025 applies. The instruments introduced under the corporate tax reform and AVS financing package (RFFA) — notably the patent box and the additional deduction for research and development — can reduce the effective rate to 11.41%. Their impact is limited for corporate groups falling within the scope of the global minimum tax (Pillar 2), which aims for an effective minimum rate of 15%.

Internationally, Switzerland and the canton of Vaud remain competitive in terms of ordinary corporate taxation. With the introduction of the global minimum tax, however, statutory rates lose some of their significance. “The global minimum tax is reshaping international tax competition. Instruments supporting research, innovation and investment, together with attractive framework conditions, are therefore becoming increasingly important,” says Vincent Thalmann, Head of Corporate Tax for Western Switzerland at KPMG Switzerland.

“This development should clearly encourage the canton of Vaud to strengthen its competitiveness, in particular through the new cantonal measures expected in connection with the global minimum tax,” concludes Philippe Miauton.