Luxembourg taxes salaries at 0% to 42% plus a 7% or 9% surcharge, after about 12.95% employee social security. Couples filing jointly as class 2 pay much less than singles. Investment income is lightly taxed: no wealth tax, half of most dividends exempt, share gains tax-free after six months. Newcomers earning EUR 75,000 or more can exempt half their salary for eight years.
How Luxembourg taxes individuals
Luxembourg taxes residents on their worldwide income and non-residents on their Luxembourg income, with progressive rates from 0% to 42% and a solidarity surcharge on top. The result depends heavily on the tax class: single people pay as class 1, married and partnered couples filing jointly as class 2, which halves the income, taxes each half and doubles the result.
Social security comes first: employees pay about 12.95% of their salary, and it is deductible. Then come standard deductions, the tax scale and a set of refundable tax credits. A single tax class for everyone is planned from 2028.
The scale
23 brackets; 0% up to EUR 13,230, 42% above EUR 234,870 (class 1).
Solidarity surcharge
On the tax; 9% above EUR 150,000 taxable income (EUR 300,000 in class 2). Top rate about 45.78%.
Employee social security
Pension 8.5%, health 3.05%, dependency 1.4%.
The 2026 rates and tax classes
| Taxable income, class 1 | Marginal rate |
|---|---|
| Up to EUR 13,230 | 0% |
| EUR 13,230 – 22,050 | 8% to 11% |
| EUR 22,050 – 54,090 | 12% rising to 38% |
| EUR 54,090 – 117,450 | 39% |
| EUR 117,450 – 176,160 | 40% |
| EUR 176,160 – 234,870 | 41% |
| Above EUR 234,870 | 42% |
Class 2 brackets are twice as wide. Class 1a, for single parents and some older or widowed taxpayers, has its own more favourable scale. From 2028 a single scale replaces the classes, with transitional protection for couples married before then.
Deductions and tax credits
- Employee tax credit (CIS). Up to EUR 600 a year, tapering away between EUR 40,000 and EUR 80,000 of gross pay.
- CO2 credit. EUR 216, tapering away by EUR 80,000.
- Minimum wage credit. EUR 81 a month for salaries between EUR 1,800 and EUR 3,000; minimum-wage earners pay no tax.
- Single-parent credit. Up to EUR 3,504.
- Deductions. Employment expenses (EUR 540 minimum), commuting (up to EUR 2,574), special expenses (EUR 480 minimum), private pension (EUR 4,500), insurance premiums, childcare.
Your net salary in Luxembourg
A simplified 2026 estimate for a resident employee.
Luxembourg net salary, 2026
Employee, resident, no children. Standard deductions and the employee tax credits included.
Dividends, interest and gains
| Income | Treatment in 2026 |
|---|---|
| Dividends | 50% exempt if paid by a fully taxable company, plus EUR 1,500 allowance (EUR 3,000 for couples); the rest at progressive rates |
| Interest | 20% final withholding on Luxembourg interest; option for EU interest |
| Shares held over 6 months, stake under 10% | Tax-free |
| Shares held under 6 months | Taxed in full as speculative gains |
| Substantial stakes over 10% | Half the overall rate, with a EUR 50,000 allowance every 10 years |
| Main home | Tax-free |
| Other property held over 5 years | Half the overall rate |
| Net wealth tax | None for individuals |
| Inheritance in direct line | Exempt on the legal share |
Coming to Luxembourg: the impatriate regime
Since 2025 highly qualified newcomers can exempt 50% of their gross salary, up to EUR 400,000, for eight years. The fixed salary must be at least EUR 75,000, the employee needs five years of specialist experience, and must not have lived in Luxembourg or within 150 km of the border in the previous five years. Employees under 30 starting their first job can also receive a 75% exempt young employee bonus.
Cross-border workers from France, Belgium and Germany may work up to 34 days a year outside Luxembourg before their home country taxes those days. Non-residents earning 90% or more of their income in Luxembourg can choose to be taxed like residents.
Couples filing jointly pay far less than two singles on one salary.
Employee social security, deductible from taxable income.
No wealth tax, tax-free share gains after 6 months, 20% on interest.
The impatriate regime halves taxable salary for 8 years.