The Federal Tax Administration (FTA) has announced that the tariffs and deductions for direct federal tax will be adjusted for inflation in tax year 2027. The adjustment compensates for accumulated inflation of 0.47% since the last adjustment. All tariff steps will be adjusted accordingly.

Why is there an inflation adjustment?

The adjustment offsets the effects of so-called cold progression. Without it, taxpayers whose income rises only in line with inflation would move into higher tariff steps and pay more tax, even though their real purchasing power has not increased. Federal law therefore requires the tariffs and deductions to be adjusted to the national consumer price index.

What does this mean for employees and business owners?

For employees, the effect is modest: the adjustment of 0.47% slightly shifts the income thresholds of each tariff step upward. For self-employed persons and owners of small businesses, the same principle applies to their taxable income. The practical tax saving will generally be small, but the updated tariffs must be used for tax year 2027 calculations, provisions and planning.

Interest rates for direct federal tax

The FTA also sets the interest rates for direct federal tax separately. The current standard late-payment and refund interest rate is 4.0%, while voluntary prepayments currently receive no remuneration (0.0%).