Luxembourg income tax brackets 2026: rates and examples

Luxembourg’s 2026 income-tax scale is progressive: each rate applies only to the part of adjusted taxable income falling within the corresponding band. There are 23 bands including the initial 0% band, and the highest basic marginal rate is 42% above €234,870. ^[1]

The essential distinction: the scale applies to annual adjusted taxable income, not directly to gross salary. Deductible social contributions, special expenses, tax credits, tax class and the employment-fund surcharge can all change the final amount.

Luxembourg income tax scale for 2026

The Luxembourg Inland Revenue, the Administration des contributions directes (ACD), identifies the scale effective from 1 January 2025 as the latest tariff adjustment. At this page’s review date, that same scale remains applicable in 2026. ^[2]

Article 118 of the Income Tax Law defines the basic tariff. Articles 120, 120bis and 121 then govern the calculations specific to classes 1, 1a and 2. ^[3]

Luxembourg income tax bands

Each percentage below applies only to the fraction of adjusted taxable income within that row. Before the scale is applied, adjusted taxable income is rounded down to the nearest €50. ^{[1] [4]}

How does the progressive scale work?

The bands stack. If the last euro of income falls in the 39% band, the earlier portions remain taxed at 0%, then 8%, 9% and so on. Moving into a higher band never subjects all income to the new rate.

Marginal rate versus average rate

The marginal rate is the basic rate applied to the last euro of adjusted taxable income. The average rate is total tax divided by that income. In a progressive system, the average rate will normally remain below the marginal rate.

The basic marginal rate must also be distinguished from the employment-fund surcharge. This surcharge is calculated on the income-tax amount: 7% up to €150,000 of adjusted taxable income in classes 1 and 1a, or €300,000 in class 2, and 9% above those thresholds. ^[5]

Which scale applies in tax classes 1, 1a and 2?

Tax class does not replace the scale. It determines how the tariff is applied to the taxpayer’s circumstances. Civil status, age, qualifying children, transitional periods and the assessment method chosen by a couple may all be relevant. ^[6]

Scale for class 1

Class 1 uses the basic progressive tariff directly. A single person without a child will generally fall in this class, subject to all statutory criteria. ^[6]

Scale for class 1a

Class 1a includes certain widowed taxpayers, people entitled to tax relief for a child and people older than 64 at the start of the year, provided they do not qualify for class 2. Article 120bis has its own calculation; it is not a simple flat discount on class 1. ^{[3] [6]}

Scale for class 2

Class 2 applies income splitting. Joint adjusted taxable income is divided by two, the class-1 scale is applied to that half, and the result is doubled. The effect therefore depends on both the household’s income level and how income is divided between partners. ^[7]

For married non-residents, marriage alone does not necessarily provide class 2. The conditions for resident-equivalent treatment and joint assessment must be checked. ^[8]

Worked examples using the 2026 scale

These simulations isolate the class-1 tariff. They start from adjusted taxable income, not gross salary. They include the employment-fund surcharge but exclude tax credits, reliefs, tax already withheld and any other income or deductions.

The calculations use the official bands and employment-fund rates. Minor one-cent differences may arise from display rounding. ^{[1] [5]}

Detailed €50,000 example

At €50,000 of class-1 adjusted taxable income, successive portions are taxed from 0% through 36%. Basic tax is €7,341.30. The 7% surcharge adds €513.89, producing €7,855.19 before credits and reliefs. The marginal rate is 36%, while the average rate after the surcharge is 15.71%.

Luxembourg tax scale: 2025 versus 2026

At the review date, no new set of bands has entered into force solely for 2026. The tariff published as applicable from 2025 remains the latest official adjustment. ^[2]

This comparison concerns the tariff bands only. Credits, deductions and social parameters may change without altering the income-tax scale.

Annual tariff versus monthly wage withholding

The annual article-118 tariff and the monthly wage-withholding table are not interchangeable. The ACD separately publishes the general income-tax tariff, annual wage tables, monthly wage tables and rates for non-periodic remuneration. ^[2]

Multiplying one month’s withholding by twelve does not necessarily reproduce annual tax. A bonus, tax-card change, foreign income or annual deductions may create a difference.

How to estimate Luxembourg income tax

1. total annual taxable income;
2. subtract allowable charges and deductions to obtain taxable income;
3. apply the statutory rounding to adjusted taxable income;
4. apply the class 1, 1a or 2 mechanism;
5. add the employment-fund surcharge;
6. subtract applicable credits and reliefs;
7. compare the final liability with tax already withheld or paid.

A bracket table alone therefore cannot reproduce a tax assessment or payslip.

Use the Luxembourg gross-to-net salary calculator for a complete pay estimate, the net-to-gross calculator for a target take-home amount, the employer-cost calculator for a total budget, and the bonus and 13th-salary calculator for exceptional pay. See also Luxembourg tax classes 1, 1a and 2.

Legislative watch as at 14 September 2026

Parliamentary file 8775, which notably proposes a temporary economic tax credit, remains listed as being in committee. No unadopted measure is included in this scale or the examples. ^[9]

Frequently asked questions about Luxembourg tax brackets

What are the Luxembourg income tax brackets in 2026?

There are 23 bands including the 0% band. The scale starts at 0% below €13,230 and reaches 42% on the part of adjusted taxable income above €234,870.

What is Luxembourg’s highest income-tax rate?

The highest basic marginal rate is 42%. The employment-fund surcharge is added to the tax amount; this does not mean that all income is taxed at 42%.

What is the difference between marginal and average tax rates?

The marginal rate applies to the last taxable euro within the highest band reached. The average rate is total tax divided by adjusted taxable income and is normally lower.

Does moving into a higher band tax all income at that rate?

No. Only the portion within the new band is taxed at the higher rate. Earlier portions retain their lower rates.

How is class 1 taxed?

Class 1 uses the basic progressive tariff under article 118 and applies to taxpayers who do not meet the conditions for classes 1a or 2.

How is class 2 taxed?

Class 2 uses splitting: class-1 tax is calculated on half the joint adjusted taxable income, then doubled.

Did the tax scale change from 2025 to 2026?

No change to the bands had been published at the review date. The ACD still identifies the tariff effective from 1 January 2025 as the latest adjustment.