Deductions are a key element in determining taxable income in Canton Appenzell Ausserrhoden. While gross income provides the starting point, a range of recognised deductions can significantly reduce the amount subject to federal, cantonal and communal income tax.

This page gives an overview of the main deduction categories under Appenzell Ausserrhoden income tax law and how they interact with the federal rules. Exact deduction amounts, caps and detailed conditions vary by tax year and are set in the cantonal legislation.

Principles of Deductions in Appenzell Ausserrhoden

Appenzell Ausserrhoden largely follows the general Swiss approach to deductions. The system typically allows:

• Employment-related and professional expenses,
• Mandatory social security and pension contributions,
• Recognised private pension savings (Pillar 3a),
• Insurance premium deductions within cantonal limits,
• Family-related deductions and allowances,
• Property-related deductions for owner-occupied and rented property,
• Extraordinary and unavoidable expenses (e.g. medical costs).

Many deduction categories mirror federal rules, but Appenzell Ausserrhoden may apply its own lump-sums, ceilings and practical guidelines.

Employment-Related Deductions

Employees can generally deduct costs directly connected with earning their employment income. These include in particular:

• Professional expenses – often claimed as a lump-sum based on a percentage of salary, or as actual documented costs if higher and accepted by the tax authorities.
• Commuting expenses – travel between home and the regular workplace, usually based on public transport costs; deductions for private car use are typically subject to restrictive conditions and caps.
• Other job-related costs – such as mandatory professional memberships, certain licences or job-specific tools.

The canton follows federal principles but defines its own lump-sum amounts and maximums.

Social Security and Pension Contributions

Contributions to mandatory social security and occupational pension schemes are fully deductible, including:

• AHV/IV/EO (old-age, survivors, disability and loss-of-earnings insurance),
• ALV (unemployment insurance),
• Mandatory occupational pension contributions (2nd pillar),
• Recognised buy-ins into the 2nd pillar within statutory limits.

These contributions are generally withheld from salary and shown on the Swiss salary certificate, which serves as the basis for the deduction in the tax return.

Private Pension Savings (Pillar 3a)

Contributions to tax-privileged private pension schemes (Pillar 3a) are deductible up to the annual federal maximum. Appenzell Ausserrhoden applies the federal framework without major cantonal deviations.

• Taxpayers affiliated to a 2nd pillar pension plan, and
• Taxpayers without 2nd pillar coverage (e.g. self-employed) with a higher Pillar 3a limit.

Insurance Premiums and Related Deductions

The canton grants deductions for certain insurance premiums and, where applicable, related items such as:

• Health insurance and qualifying life insurance premiums (subject to combined federal and cantonal caps),
• In some cases, income from savings and similar instruments is taken into account within the broader insurance/interest deduction framework.

The precise allowance depends on cantonal limits and the taxpayer’s family situation.

Family-Related Deductions and Allowances

Taxpayers with children or dependants benefit from a range of deductions designed to reflect family responsibilities, for example:

• Child deductions for each dependent child,
• Deductions for dependants in need of support (e.g. parents or relatives),
• Special deductions or allowances for single parents.

Deduction amounts are set in the cantonal tax law and may differ from federal child allowances and deductions.

Childcare Costs

Under certain conditions, childcare expenses can be deducted, particularly where they are necessary to enable:

• Gainful employment by one or both parents, or
• Education or training of the parents.

Typically, the following conditions apply:

• Expenses must be documented (invoices, contracts),
• Only recognised forms of childcare qualify (e.g. registered daycare, nurseries, after-school care),
• Cantonal maximum amounts per child and per year apply.

Education and Training Costs

Appenzell Ausserrhoden generally recognises deductions for continuing education and training closely related to the taxpayer’s current profession. Examples include:

• Professional development courses,
• Advanced training and postgraduate programs,
• Specialised seminars that strengthen existing professional skills.

Initial education for a first profession is usually treated differently and is often not deductible, in line with federal practice.

Real Estate and Property-Related Deductions

Property owners in Appenzell Ausserrhoden must declare rental income or the imputed rental value of owner-occupied property. In return, they may benefit from:

• Mortgage interest deductions,
• Property maintenance costs (either actual expenses or a lump-sum based on cantonal rules),
• Recognised renovation expenses that qualify as maintenance (not value-enhancing investments).

The distinction between deductible maintenance and non-deductible value-enhancing work can be nuanced and may require careful review of invoices and cantonal practice.

Extraordinary Expenses and Medical Costs

Certain extraordinary expenses may be deducted if they are unavoidable and exceed a defined proportion of income. Typical examples are:

• High medical and dental costs not covered by insurance,
• Disability-related expenses and assistance costs,
• Support payments to persons in financial distress that go beyond normal living expenses.

The thresholds and qualifying criteria are set in the cantonal legislation; detailed documentation is essential.

Cross-Border Situations and Allocation Rules

Taxpayers with income or assets outside Appenzell Ausserrhoden or abroad may be affected by:

• Double Taxation Agreements (DTAs),
• Unilateral relief provisions,
• Inter-cantonal allocation and exemption-with-progression mechanisms.

These mechanisms do not always operate as “deductions” in the narrow sense, but they can reduce the income or tax allocated to Appenzell Ausserrhoden.

Interaction Between Federal and Cantonal Deductions

Many expenses are relevant at both federal and cantonal level, but their impact is not identical because:

• Federal and cantonal caps may differ,
• Some deductions are granted at one level but not the other,
• The same expense can be treated differently in the federal and cantonal tax calculations.

When completing the tax return, taxpayers must apply the correct rules separately in the federal and cantonal sections.

Documentation and Evidence

The ability to claim deductions in Appenzell Ausserrhoden depends heavily on proper documentation. It is advisable to keep:

• Salary certificates and pension contribution confirmations,
• Tickets and invoices for commuting and work-related expenses,
• Contracts and invoices for childcare, education and training,
• Insurance premium statements,
• Bank and mortgage statements,
• Receipts for significant medical or extraordinary expenses.

Practical Considerations

The overall effect of deductions in Appenzell Ausserrhoden depends on:

• The composition and level of income,
• The taxpayer’s family situation,
• Housing status and property ownership,
• The interaction between federal and cantonal deduction rules.

To understand your specific tax position, this Deductions section should be read together with the pages on Rates, Filing Requirements, Special Rules and Examples in the Appenzell Ausserrhoden income tax guide.