Federal finances
An overview of the federal budget and the financial outlook for the years ahead.
Brief summary
The federal budgetary situation is strained. Following financing deficits in 2020 to 2024, the Confederation closed 2025 with a financing surplus of CHF 0.3 billion. The balanced result can primarily be attributed to a temporary increase in receipts from the canton of Geneva.
Despite the balanced financial result, the federal financial outlook for 2027 to 2029 remains challenging. Owing to the strong growth in expenditure (esp. Armed Forces and AHV), the federal budget will continue to show a structural imbalance for the next few years. Indeed, the last few budgets were only balanced due to relief measures.
With relief package 27, the Federal Council implemented measures at an early stage to bring the federal budget into structural balance from 2027 onward. Relief package 27 is currently being debated by Parliament. However, following the cuts of around CHF 900 million to relief package 27 decided by the first chamber, the Council of States, the 2027 budget is no longer balanced. Currently, a structural financing deficit of around CHF 400 million is expected in 2027. As a result, further measures are likely to be necessary in order to comply with the debt brake.
Moreover, the Federal Council wants to substantially strengthen security and defence, and to increase VAT by 0.8 percentage points for this purpose. In addition, one third of the additional funds is to be used to finance the growth planned to date. This will result in the federal budget being temporarily balanced in 2028 at least. However, 2029 will once again see a structural deficit of CHF 0.8 billion.
Who decides on federal expenditure?
In the middle of each year, the Federal Council prepares a draft budget for the year ahead. This contains all planned expenditure and receipts. This budget is subject to the debt brake, which means that the Confederation may not incur any new debt and must keep its expenditure and receipts balanced, although exceptions are possible. The Federal Council submits its proposal to Parliament. As Parliament has budgetary sovereignty, it has the final say on financing decisions. During the winter session, Parliament discusses the budget with integrated task and financial plan (ITFP), which contains the outlook for the budget year and the subsequent three years.
What are federal receipts derived from?
In 2025, the Confederation generated ordinary receipts of CHF 87.2 billion. This represents a year-on-year increase of 3.9%. The most important source of receipts is direct federal tax, approximately half of which is paid by natural persons (private individuals) and half by legal entities (companies). The second-largest source of receipts is VAT, which is levied on services and goods purchased. Further key sources of receipts include other consumption taxes, such as mineral oil tax and tobacco duty, and withholding tax, which is levied mainly on dividends and interest.
More information on federal receipts
What are the Confederation's main expenditure items?
The Confederation had ordinary expenditure of CHF 86 billion in 2025. This is 3.5% more than the previous year. Social welfare was the largest task area, followed by finances and taxes (including the cantons' shares of direct federal tax) and transportation. There was extraordinary expenditure of CHF 1.5 billion in 2025, especially for people from Ukraine seeking protection (0.7 bn) and a one-time capital contribution to SBB (0.85 bn). Total federal expenditure, i.e. ordinary and extraordinary expenditure combined, amounted to CHF 87.6 billion in 2025.
More information on federal expenditure
Where does my tax money go?
In Switzerland, taxes are levied by the federal government, the cantons and the communes. Swiss federalism also characterises the country's tax system. All of the 26 cantons have their own tax laws and levy very different taxes on income, assets, inheritance and other tax items. At federal level, taxes are generally not earmarked, i.e. they go to the general federal coffers to finance all subsidies, infrastructures and services that are essential for the smooth functioning of society, such as social welfare, health and security.
Exceptions include restricted receipts, such as the percentage of VAT to finance AHV, and much of the mineral oil tax and transportation levies (heavy vehicle charge, automobile duty, motorway tax sticker), which go to the motorway and urban transportation fund
Why is the Confederation's financial situation strained?
Despite the financing deficit of CHF 0.3 billion in 2025, the situation remains strained. The good result is primarily attributable to a temporary increase in receipts.
In the absence of countermeasures, there will be structural deficits of CHF 2 to 3 billion in the financial plan years 2027 and 2029.
This is because expenditure is growing much faster than receipts. In particular, expenditure on retirement provision (AHV) and the Armed Forces is rising sharply. Without countermeasures, the debt brake requirements cannot be met.
What is the Federal Council doing to balance the federal budget in the long term?
The Federal Council wishes to prevent impending structural deficits, comply with the debt brake and bring the federal budget into balance in the medium term. To achieve this, it put together relief package 27, carried out a consultation on the proposals and approved the dispatch for submission to Parliament. The measures are intended to ease the burden on the federal budget by CHF 2.4 billion in 2027 and around CHF 3 billion in 2028 and 2029. The Council of States, as the first parliamentary chamber, has already voted to make significant cuts to the package.
There are also plans to raise VAT by 0.8 percentage points from 2028 onward, in order to strengthen the Armed Forces and security. Even after these measures have been fully implemented, there will be little financial room for manoeuvre.
Dossiers of the relevant office
Index
Press releases on the topic
Second 2025 extrapolation confirms financing deficit
The Federal Council took note of the current end-September extrapolation on 29 October 2025. The Confederation is reckoning on a financing deficit of CHF 0.6 billion for this year. The expected deficit is thus likely to be CHF 0.4 billion higher than forecast in the June extrapolation. However, the deficit is smaller than originally budgeted.
2026 budget with integrated task and financial plan for 2027 to 2029 available
Effective immediately, the 2026 budget is available in electronic format on the website of the Federal Finance Administration (FFA). The hard copy will be released in mid-September.
First extrapolation for 2025: financing deficit of CHF 200 million
The Federal Council was informed about the current extrapolation on August 13, 2025. According to this first extrapolation, the Confederation is anticipating a financing deficit of CHF 200 million for this year. A deficit of CHF 800 million had been budgeted. The improvement can be explained primarily by much higher tax receipts.
Federal Finance Administration FFA
Switzerland - 3003 Bern