What is the tax-free income threshold in Luxembourg for 2026?

In 2026, the first **13,230 euros** of your annual income is completely free of income tax. This applies to all resident taxpayers. Everything above this threshold is taxed progressively, starting at 8 percent.

Who qualifies for the Luxembourg impatriate (expat) tax regime in 2026?

Individuals hired from abroad or seconded to Luxembourg who become Luxembourg tax residents may qualify. The regime allows for a **50 percent tax exemption on compensation capped at 400,000 euros** — a maximum yearly tax exemption of 200,000 euros. To qualify, you must be highly qualified, earn an annual base salary of at least **75,000 euros**, and must not have been subject to tax in Luxembourg, nor lived within 150 km of the Luxembourg border, for the five years prior to starting work there.

How long can you benefit from the impatriate tax regime?

As of July 15, 2024, the impatriate tax scheme is available for eligible employees for **8 years** — up from the previous 5-year limit. The regime applies for the year of arrival and the 8 following years. This is one of the most generous expat tax windows in Europe and it is worth planning your career timeline around it.

What are the employee social security contribution rates in Luxembourg for 2026?

The total employee social contribution rate is **12.95 percent** of gross salary from 1 January 2026, split between health and maternity insurance (3.05 percent), pension insurance (8.5 percent), and dependency insurance (1.4 percent). Contributions for health, pension, and work accident coverage are capped at a maximum threshold of 5 times the minimum wage.

What is the new AMVP deduction and does it apply to you?

The new AMVP (*Abattement de Maintien dans la Vie Professionnelle*) allows eligible employees who keep working until age 65 to deduct up to **9,000 euros per year** from their taxable income. This deduction only applies for tax years 2025 and 2026, and is expected to be replaced by the new individual taxation system planned for 2028. If you are close to early retirement age and still working, this is the single most valuable deduction available to you right now — but the window is closing.

Luxembourg 2026: The Legal Tax Advantages Most Workers Never Use

Most people working in Luxembourg hand over thousands of euros every year that they were never legally required to pay. Not because they cheated the system — but because nobody ever told them the system had a door. And right now, that door is wide open.

The Hidden Money You Are Losing Every Single Month in Luxembourg

Here is what most people never find out: Luxembourg has one of the most complex but also one of the most generous personal income tax systems in the entire European Union. There are three tax classes and 23 distinct income tax brackets. That complexity is exactly why most workers never dig past what their employer deducts automatically — and it is costing them real money every month.

Think about this for a moment. The OECD estimates that the average worker in Luxembourg earned 77,844 euros in a year. At that income level, even a single missed deduction worth 2,000 euros could cost you over 700 euros in unnecessary tax. Multiply that across several years and the number starts to feel like a second rent.

And this is where workers get caught out. Your employer withholds your income tax monthly using a formula based on your tax class and gross salary. But that formula only applies the deductions your employer knows about. The rest — the ones that could genuinely change your net pay — are your job to claim. Most workers never do.

What the Law Actually Says

The Law of 4 December 1967 on income tax, as amended, lays down the applicable taxation rules for taxpayers in Luxembourg. This is the foundational text — and buried inside it are deductions for professional expenses, special expenses, extraordinary charges, private pension contributions, and more. They are not optional extras only for the wealthy. They are your legal right.

In the context of determining withholding tax on wages, certain fiscally deductible expenses are taken into account either automatically or on the worker's explicit request. These include professional expenses (frais d'obtention), special expenses (dépenses spéciales), and extraordinary charges (charges extraordinaires). The problem is that the automatic deductions are modest. The real money is in what you claim yourself.

Taxpayers who are wage earners and who wish to deduct certain expenses may either request an annual adjustment or apply to the competent RTS tax office for a deduction to be taken into account in their withholding tax card. In other words, you do not have to wait until the end of the year. You can act right now and see more money in your pay packet every single month.

The Real Numbers for 2026

Before you can claim what you are owed, you need to know the exact figures. Here are the verified key numbers for the 2026 tax year in Luxembourg:

Category	Figure	Source
Tax-free income threshold	13,230 euros per year	ACD / impotsdirects.public.lu
Top income tax rate	42 percent (above 234,871 euros)	ACD / impotsdirects.public.lu
Number of tax brackets	23 brackets	ACD
Gross minimum wage (unskilled, from June 2026)	2,771.33 euros/month	justarrived.lu / STATEC
Gross minimum wage (skilled, from June 2026)	3,325.59 euros/month	justarrived.lu / STATEC
Average gross annual salary	75,919 euros	STATEC (justarrived.lu)
Employee social contributions (total)	12.95 percent of gross salary	CCSS (from Jan 2026)
Private pension deduction ceiling (111bis)	4,500 euros/year (raised 41 percent in 2026)	ACD / impotsdirects.public.lu
AMVP deduction (continued employment)	Up to 9,000 euros/year	ACD (2026)
CO2 tax credit (CIS-CO2)	Up to 216 euros/year	ACD (2026)
Shared custody child tax credit	Up to 922.50 euros/child	ACD (2026)
Standard professional expenses deduction	Minimum 540 euros/year	OECD Taxing Wages 2026
Wage indexation increase (June 2026)	+2.5 percent automatic	STATEC

In 2026, the first 13,230 euros of your income is completely tax-free, with the lowest rate of 8 percent applying thereafter. The top rate of 42 percent only kicks in on earnings above 234,871 euros. That means most workers in Luxembourg are operating somewhere in the mid-range brackets — and every deduction they claim pushes more of their income back into a lower band, or out of taxation entirely.

It is worth noting that the employee pension deduction increased from 8 percent to 8.5 percent as part of measures to strengthen the social security system for future generations. This means your gross-to-net calculation has changed since January 2026 — and if you have not reviewed your payslip, now is the time.

What Your Employer Will Never Tell You

Do not leave this money on the table. Here are the three biggest legal advantages most workers in Luxembourg never claim — and they are all completely legitimate.

First: the upgraded private pension deduction. The annual tax-deductible ceiling for private pension savings (the so-called "111bis" contract) rose significantly from 3,200 euros to 4,500 euros per person starting in 2026. That is a 41 percent increase in the deduction ceiling. If you are single with a marginal tax rate of 35 percent, contributing 4,500 euros to your 111bis contract saves you 1,575 euros in taxes every year. For a couple, the savings can exceed 4,000 euros. If you have a 111bis contract and have not increased your contributions to match the new limit, you are giving money away.

Second: the brand-new AMVP deduction. This one came into force on 1 January 2026 and almost nobody is talking about it. The Abattement de Maintien dans la Vie Professionnelle (AMVP) — or "continued employment deduction" — rewards those who choose to stay in work when they could already take early retirement. If you meet the conditions for early retirement but decide to keep working until age 65, you can deduct up to 9,000 euros per year from your taxable income — that is 750 euros per month. To access this benefit, you need to obtain a pension eligibility certificate from your pension body (CNAP for most employees). One document. Potentially thousands of euros saved.

Third: the shared custody child tax credit. If you are a parent in an alternating residence arrangement, listen up. A new tax credit of up to 922.50 euros per child is available for parents in alternating residence arrangements who do not benefit from tax class 1a. This credit must be actively claimed — it will not appear automatically on your payslip. You claim it through your annual income tax return (Form 100) on the LVTx platform at impotsdirects.public.lu. And if you want to see exactly how these deductions change your real take-home pay before you file, use the EuroDuty salary calculator right now — it is free and takes two minutes.

Luxembourg vs The Rest of Europe

Let us be honest about where Luxembourg actually stands. As of June 2026, the gross minimum social wage in Luxembourg is 2,771.33 euros per month for unskilled workers and 3,325.59 euros for skilled workers. For context, the minimum wage in France sits at around 1,867 euros gross, Germany's is approximately 2,409 euros gross, and Belgium's is around 2,070 euros gross. Luxembourg does not just lead — it leads by a significant margin. You are already earning more than most of your European neighbours before a single tax advantage is applied.

But here is the twist. Approximately 220,000 cross-border workers commute to Luxembourg daily from France, Belgium, and Germany. These workers pay Luxembourg income tax on their Luxembourg employment income, which is also declared in their country of residence. If you are a cross-border worker, your tax situation is genuinely different — you may have additional filing obligations and deduction rights that a resident worker does not have. You should be comparing your exact tax position against colleagues on both sides of the border. The EuroDuty salary comparator lets you do exactly that across all 27 EU countries in one place.

How to Claim What You Are Owed

Stop waiting for your employer to sort this out. Here are the exact steps you need to take today:

Check your tax class. Log into the LVTx platform at impotsdirects.public.lu. Confirm you are in the correct class — Class 1 (single), Class 1a (single with dependents), or Class 2 (married/civil partner). Divorced taxpayers, for example, are granted tax class 2 for the 2025, 2026 and 2027 taxation years — a significant advantage many people do not realise they hold.
Open or top up a 111bis private pension contract. Contact your bank or an approved Luxembourg pension provider. If you already have a private pension contract, consider increasing your monthly contributions to take full advantage of the new 4,500-euro limit. To reach 4,500 euros over the year, you need to contribute just 375 euros per month.
Apply for the AMVP deduction if eligible. Request a pension eligibility certificate from CNAP (Centre National d'Assurance Pension — cnap.lu). If you qualify for early retirement but are continuing to work, submit this certificate with your Form 100 tax return at impotsdirects.public.lu.
File your annual tax return (Form 100). Luxembourg tax returns are filed electronically through the LVTx platform. You must file your tax return on your earnings for 2025 by 31 December 2026. Do not miss this deadline — it is the only way to claim back deductions your employer did not apply automatically.
Cross-border workers: contact the ACD directly. Cross-border workers must file a Luxembourg tax return if they have Luxembourg-source income. The filing deadline is typically 31 March of the year following the tax year. Contact the ACD at impotsdirects.public.lu or call their helpline to confirm which cross-border treaty applies to your specific situation.
Verify your social contribution deductions with the CCSS. Check your payslip against the official rates published at ccss.public.lu to make sure you are not being overcharged — and that your dependency and health contributions are correctly calculated.

Use the EuroDuty salary calculator to model exactly how each deduction changes your net take-home pay before you act.

Calculate your exact net salary and compare your rights across all 27 EU countries at EuroDuty — completely free.