Income Tax in Liechtenstein: What Employees Really Pay

The tax on earned income is called Erwerbssteuer and has two parts that are levied together: a national tax on a progressive scale, and a municipal surcharge that your municipality of residence sets as a percentage of that national tax.

1. Determine taxable income: gross salary minus social contributions and the deductions the law allows.
2. Calculate the national tax: using the scale in Art. 19 of the Tax Act — 0 to 8 percent, in bands.
3. Add the municipal surcharge: at least 150 percent of the national tax, more in some municipalities.

The result is your total income tax. There is no separate municipal tax with its own scale — the surcharge is calculated from the national tax. If you only want to know what gross salaries look like by sector, see the salary guide.

The scale is progressive and applies to taxable income — the figure after all deductions, not to gross salary. For single people the bands are:

• up to CHF 15’855 — 0 % (tax-free allowance)
• CHF 15’856 to 21’140 — 1 %
• CHF 21’141 to 42’280 — 3 %
• CHF 42’281 to 73’990 — 4 %
• CHF 73’991 to 105’700 — 5 %
• CHF 105’701 to 137’410 — 6 %
• CHF 137’411 to 169’120 — 6.5 %
• CHF 169’121 to 211’400 — 7 %
• from CHF 211’401 — 8 %

Each band also deducts a fixed amount so the curve does not jump at the thresholds. The tax-free allowance depends on your situation: single people CHF 15’855, single parents CHF 23’783, jointly assessed spouses CHF 31’710. For spouses all band thresholds are doubled as well — in effect full splitting.

Both calculations assume a single person and deduct only the statutory social contributions (AHV, IV and FAK together 4.9 percent, unemployment insurance 0.5 percent). The municipal surcharge is set at 150 percent — the legal minimum, which almost all municipalities apply.

CHF 5’000 gross a month (CHF 60’000 a year): after social contributions of CHF 3’240, CHF 56’760 remains as taxable income. The national tax on that is CHF 1’266, plus CHF 1’900 municipal surcharge — CHF 3’166 a year, or about CHF 264 a month. That is 5.3 percent of gross pay.

CHF 8’000 gross a month (CHF 96’000 a year): after social contributions of CHF 5’184, CHF 90’816 remains. National tax CHF 2’797, municipal surcharge CHF 4’195 — CHF 6’992 a year, or about CHF 583 a month, which is 7.3 percent of gross pay.

Both figures are upper bounds: pension contributions, work-related expenses, insurance deductions and child deductions reduce taxable income further — and with it the tax. To see what is left of a gross salary overall, use the salary calculator.

The municipal surcharge is a percentage of the national tax, set anew each year by each municipal council. The Tax Act sets the frame: it may not fall below 150 percent nor exceed 250 percent.

In practice that frame is almost empty. The large majority of the eleven municipalities sit at the legal minimum of 150 percent, and the few above it have been lowering for years. Balzers, for instance, set its surcharge at 150 percent for 2026. So do not overestimate the gap between the cheapest and the most expensive municipality — it is smaller than in many Swiss cantons.

What counts is your municipality of residence, not your place of work. If you live and work in Liechtenstein, it pays to check the current rate with your municipality — it appears in the annual budget. Open positions by municipality are in Vaduz, Schaan and Balzers.

Liechtenstein does not tax wealth directly; it converts it into income. For that the law applies a standardised return on assets — the Sollertrag. It amounts to 4 percent of your wealth and is added to your taxable income before the scale is applied.

This has two consequences. First, investment income itself is not taxed again — the conversion replaces a separate tax on returns. Second, CHF 100’000 of wealth raises your taxable income by CHF 4’000, regardless of the interest or dividends you actually received. The government reviews the level of this rate every four years.

Your tax is not due only at year end: the employer deducts it straight from your salary and pays it over. How much is withheld is determined by the tax administration, which takes into account your expected annual income, flat-rate deductions and your family circumstances.

The tax return is still mandatory. It settles what the payroll deduction only estimated: anything over-withheld comes back, anything short you pay. Note that the law expressly requires you to file even if nobody sent you a form. Your municipality announces the deadline and the online procedure each year.

Cross-border commuters are treated differently: anyone working in Liechtenstein but living in Switzerland or Austria pays no income tax on this scale here, but a withholding tax of 4 percent of gross salary. No municipal surcharge is levied on that deduction, and the tax is credited in the country of residence. The details are in the cross-border commuter guide.

This article does not replace individual tax advice. It reflects the Tax Act as it stands in 2026; bands and allowances are adjusted when inflation persists.