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Income tax in Luxembourg 2026
Luxembourg's scale runs through 23 small brackets: nothing on the first €13,230, then 8% rising in steps to 42% above €234,870 — with a surcharge for the employment fund (7%, or 9% at high incomes) lifting the true top rate to 45.78%.
Your tax class matters as much as the scale: married couples in class 2 split income between them, effectively doubling the width of every bracket.
A 1.4% dependency contribution applies to employment and investment income alike (first €675.93 a month exempt).
At a glance
- top rate
- 42% + 9% surcharge = 45.78% marginal (above €234,870; class 2 doubled)
- entry band
- 0% up to €13,230
- tax year basis
- Calendar year
- filing deadline
- 31 December of the following year — the window opens in early April
- residency basis
- Residents taxed on worldwide income
- regime flag
- Impatriate premium 50% exempt for 8 years
Rates
Income tax scale, selected points (2026, single class 1)
| Taxable income (EUR) | Rate on this band | Note |
|---|---|---|
| 0 – 13,230 | 0% | |
| 13,230 – 22,050 | 8% – 11% | Rates rise by 1 point per small band |
| 22,050 – 45,000 | 12% – 30% | Rising by 2 points per band |
| 45,000 – 117,450 | 32% – 39% | |
| 117,450 – 234,870 | 40% – 41% | |
| Over 234,870 | 42% | Employment-fund surcharge of 7%/9% of the tax on top; class 2 thresholds are doubled |
Marginal rates apply within each band.
Thresholds & allowances
- Standard employee deduction€540 for work expenses (per earning spouse)
Commuting deduction up to €2,574 by distance
- Extra-professional allowance€4,500 for two-earner married couples
Split €2,250 each under separate taxation
- Special expensesInsurance/interest €672 per household member; home savings to €1,344 (ages 18–40); third-pillar pension €4,500
A €480 minimum lump sum applies (doubled for two-earner couples)
- Single-parent credit€750 – €3,504 a year
Full amount below €60,000 of income
- Profit-sharing premium50% tax-exempt
Up to 30% of annual salary, within an employer pool of 7.5% of prior-year profits
Surcharges
- Employment-fund surcharge7% of the tax (9% above €150,000 / €300,000 class 2)over The computed income tax
- Dependency contribution1.4%over Employment and investment income (monthly allowance €675.93; not deductible)
Residency
Residency trigger
You are resident with a Luxembourg domicile (a home you keep and use) or after 6 months' continuous presence (short absences ignored, and the period can straddle two years). Married couples are taxed jointly in class 2 with income splitting, with an opt-out for separate taxation.
Non-resident treatment
Non-residents pay Luxembourg tax on Luxembourg income at resident rates. Earning 90%+ of worldwide income in Luxembourg (or having under €13,000 of non-Luxembourg income) unlocks resident treatment, class 2 splitting and deductions — vital for Belgian, French and German frontier workers.
Notes
- Filing is only compulsory above €100,000 of income (or ~€30,000–€36,000 with multiple withheld incomes) — many employees never file, though filing often pays through deductions.
- Company cars are taxed at 0.5%–2% of list price per month depending on engine and emissions — electric cars get the lowest bands until 2027 registrations.
- Overtime pay is fully tax-exempt for private-sector employees — a distinctive Luxembourg perk.
- Interest-subsidy exemptions apply to employer loans (€3,000 for a main-home loan, doubled for couples).
- Self-employed traders also owe municipal business tax (about 6.75% in Luxembourg City after a €40,000 allowance) on top of income tax.
- The impatriate regime needs 5 prior years outside Luxembourg (and 150+ km away), a €75,000 minimum salary, and runs to the end of year 8.
FAQ
What is the top income tax rate in Luxembourg?
42% above €234,870 of taxable income — 45.78% marginal once the 9% employment-fund surcharge is included, plus the 1.4% dependency contribution.
How does Luxembourg tax married couples?
Jointly in class 2 with full income splitting: the scale applies to half the combined income, and the result is doubled — effectively doubling every bracket. Separate taxation is available on request.
What does the Luxembourg impatriate regime offer?
For qualifying hires from abroad on €75,000+: an impatriation premium that is 50% tax-exempt (premium up to €400,000 or 50% of salary), plus tax-free moving and housing costs up to €50,000 (€80,000 for couples), lasting through the 8th year.
Figures: tax year 2026, compiled from public sources. Not tax advice.