One payout, one separate tax
At some point before retirement you decide how you want to receive your pension money. Many people take at least part of it as a lump sum (Kapitalbezug). The tax on that lump sum is often the single largest tax bill of a lifetime, and it is paid only once. That makes it worth understanding before you sign the withdrawal form.
This article explains how the tax works, shows what it costs in nine cantonal capitals for the 2026 tax year, and where the real levers are.
How the capital withdrawal tax works
Capital benefits from the second pillar and from pillar 3a are not added to your salary or pension income. They are taxed on their own, for the year in which they are paid out. Four rules shape the result:
- Separate tax: the lump sum is taxed separately from your other income and always as a full annual tax. Social deductions are not granted (Art. 38 of the Federal Act on Direct Federal Taxation).
- Reduced federal rate: the federal tax is one fifth of the normal income tax tariff. From a lump sum of about CHF 783,200, the federal tax is a flat 2.3 percent of the amount.
- Cantonal tariffs: each canton has its own reduced tariff. In most of the cantons we calculated the rate rises with the amount, in some it stays proportional. The communal multiplier then decides how much the municipality adds.
- Same year, one total: all capital benefits you receive in the same tax year are added together and taxed at the rate for the total. That includes pillar 3a. At federal level, the capital benefits of both spouses in the same year are also combined.
Once paid out, the money is part of your taxable wealth. From the following year on it counts for wealth tax like any other savings.
Capital withdrawal tax 2026 in nine cantonal capitals
We calculated the tax with the official calculator of the Federal Tax Administration (ESTV) for the 2026 tax year: single, no church tax, age 65, residence in the cantonal capital. The amounts include federal, cantonal and communal tax.
| Canton (capital) | CHF 250,000 | CHF 500,000 | CHF 1,000,000 |
|---|---|---|---|
| Zug | CHF 11,253 (4.5 %) | CHF 28,253 (5.7 %) | CHF 61,552 (6.2 %) |
| Schwyz | CHF 12,041 (4.8 %) | CHF 31,876 (6.4 %) | CHF 65,750 (6.6 %) |
| Basel-Landschaft (Liestal) | CHF 12,151 (4.9 %) | CHF 33,601 (6.7 %) | CHF 95,600 (9.6 %) |
| Zurich | CHF 14,601 (5.8 %) | CHF 35,068 (7.0 %) | CHF 109,542 (11.0 %) |
| Geneva | CHF 15,551 (6.2 %) | CHF 37,051 (7.4 %) | CHF 81,069 (8.1 %) |
| Aargau (Aarau) | CHF 17,188 (6.9 %) | CHF 39,899 (8.0 %) | CHF 85,233 (8.5 %) |
| St. Gallen | CHF 17,266 (6.9 %) | CHF 37,231 (7.4 %) | CHF 76,460 (7.6 %) |
| Thurgau (Frauenfeld) | CHF 18,961 (7.6 %) | CHF 40,621 (8.1 %) | CHF 83,240 (8.3 %) |
| Basel-Stadt | CHF 20,651 (8.3 %) | CHF 47,251 (9.5 %) | CHF 99,750 (10.0 %) |
Source: ESTV tax calculator, capital benefits from pension schemes, tax year 2026, calculated on 14 October 2026. Sorted by the amount on CHF 250,000. The percentage is the share of the lump sum. The federal tax is the same everywhere: CHF 3,901 on CHF 250,000, CHF 10,501 on CHF 500,000 and CHF 23,000 on CHF 1 million.
Three things stand out. Zug and Schwyz are lowest at every amount. Zurich sits in the middle for smaller sums but has the highest tax of the nine on CHF 1 million, because its tariff keeps rising with the amount. And the gap between cantons grows with the lump sum: on CHF 250,000 it is about CHF 9,400, on CHF 1 million almost CHF 48,000. You can model your own municipality with the ESTV tax calculator.
Staggering: where it pays and where it pays less
Because the rate rises with the amount and same-year withdrawals are added up, the classic advice is to spread capital over several tax years. Our 2026 calculation shows that this works, but not equally everywhere. We compared CHF 500,000 in one year with two withdrawals of CHF 250,000 in two different years:
| Canton (capital) | CHF 500,000 in one year | 2 × CHF 250,000 | Saving |
|---|---|---|---|
| Basel-Landschaft (Liestal) | CHF 33,601 | CHF 24,302 | CHF 9,299 |
| Schwyz | CHF 31,876 | CHF 24,082 | CHF 7,794 |
| Basel-Stadt | CHF 47,251 | CHF 41,302 | CHF 5,949 |
| Geneva | CHF 37,051 | CHF 31,102 | CHF 5,949 |
| Zurich | CHF 35,068 | CHF 29,202 | CHF 5,866 |
| Zug | CHF 28,253 | CHF 22,506 | CHF 5,747 |
| Aargau (Aarau) | CHF 39,899 | CHF 34,376 | CHF 5,523 |
| St. Gallen | CHF 37,231 | CHF 34,532 | CHF 2,699 |
| Thurgau (Frauenfeld) | CHF 40,621 | CHF 37,922 | CHF 2,699 |
Source: ESTV tax calculator, tax year 2026, single, no church tax, age 65. In St. Gallen and Frauenfeld the cantonal and communal tax on CHF 500,000 is exactly twice the tax on CHF 250,000. There, splitting only saves federal tax. In the other seven capitals the cantonal tariff is progressive and staggering helps on both levels.
Two limits apply. Above about CHF 783,200 per withdrawal the federal tax is flat, so splitting very large sums only helps at cantonal level. And staggering only works with assets you can actually withdraw in different years.
Which assets you can spread
- Pillar 3a: you can withdraw at the earliest five years before your AHV reference age, and up to five years after it if you keep working. Several accounts opened early let you withdraw in different years. You cannot split an existing account later. If you stop working after the reference age, all remaining 3a accounts fall due in the same year (ESTV Circular No. 18a, PDF in German). How you invest the money in the meantime is a separate question, covered in pillar 3a stock strategy versus savings account.
- Vested benefits: if you leave a pension fund without joining a new one, your assets can go into at most two vested benefits accounts. They can be withdrawn in two different tax years. If you join a new fund, the money must be transferred there. More on the rules in our guide to the vested benefits account.
- Pension fund: by law you can take a quarter of the mandatory retirement assets as capital. Anything more depends on your fund rules, which often require notice in advance.
The three-year lock after a buy-in
Benefits resulting from a pension fund buy-in may not be withdrawn as capital within the next three years (Art. 79b para. 3 of the Occupational Pensions Act). If you withdraw anyway, the deduction for the buy-in is usually reversed. A buy-in made mainly to save tax pays off when you later take that money as capital, after the lock. When and how much to buy in is covered in tax tip 11 on pension fund buy-ins, and you can test the numbers with our pension fund buy-in calculator.
Example: Nadia in Aarau
Nadia is 60, single and lives in Aarau. She leaves her employer and does not join a new pension fund. Her pension assets of CHF 480,000 go into two vested benefits accounts, CHF 120,000 and CHF 360,000. She also has two pillar 3a accounts with CHF 70,000 each. Her reference age is 65.
- Everything in one year: CHF 620,000 in total, tax CHF 50,947 (federal CHF 13,669, canton and municipality CHF 37,278).
- Spread over four years: 3a account one at 61 (CHF 2,649), 3a account two at 62 (CHF 2,649), the smaller vested benefits account at 63 (CHF 6,156), the larger one at 64 (CHF 27,008). Total CHF 38,462.
- Difference: CHF 12,485 less tax, simply through the order of withdrawals.
Calculated with the ESTV calculator for the 2026 tax year, single, no church tax. Tariffs change a little every year, so treat the figures as an order of magnitude for later years. If Nadia lived in St. Gallen or Frauenfeld, the saving would be smaller, because there only the federal part reacts to the split.
Lump sum or pension: the tax is only one part
A pension is taxed every year as income, at your normal rate. A lump sum is taxed once at a reduced rate, but then counts as wealth and its returns are taxed as income. Which form suits you depends on more than tax: how secure you want your income to be, whether a partner should receive a survivor's pension, and how you would invest the capital. For Geneva, where pensioner deductions play a role, see our page on taxes for retirees in Geneva. The full picture of your retirement is the subject of our retirement planning.
Moving abroad before the withdrawal
If you live abroad when the capital is paid out, Switzerland always withholds tax at source first, whatever the double taxation agreement says (Art. 19 of the Withholding Tax Ordinance). If the agreement gives the taxing right to your new country, you can reclaim the Swiss tax within three years of the payout. You need a confirmation from your new tax authority that it knows about the payment and that you are resident there. Miss the deadline and the Swiss tax stays.
Will the federal tax on lump sums go up?
In 2025 the Federal Council proposed a higher federal tax on capital withdrawals as part of its 2027 relief package. Parliament rejected this measure in March 2026. For the 2026 and 2027 tax years the federal tax therefore remains one fifth of the normal tariff.
Every case is different, the potential usually is not
What you actually pay depends on your municipality, marital status, church membership, the other capital benefits in the same year and your fund rules. This article sets out the principles and simplified examples; it does not replace individual advice.
What does generalise: the order and timing of withdrawals is decided years before retirement, and it can be worth five figures. Planning it once, with all your accounts on one page, is time well spent. If you want an outside view on your withdrawal plan and how it fits your wealth, our financial advisory is the right starting point.
Related FIN services
- Retirement Planning
- Financial Advisory
- Pension Fund Buy-in Calculator
- Vested Benefits Account
- Pillar 3a: how much tax you really save
- Tax Return Switzerland
Status October 2026, tax year 2026. This article is for general information and does not replace individual tax or legal advice. Figures: ESTV tax calculator, calculated on 14 October 2026.