What is the Luxembourg tax rate like?

Applied to the rounded adjusted taxable income, the Luxembourg income tax rate in force is as follows.

This rate corresponds to that of class 1.

  • 0% for the income bracket below €12,438
  • 8% for the income bracket between €12,438 and €14,508
  • 9% for the income bracket between €14,508 and €16,578
  • 10% for the income bracket between €16,578 and €18,648
  • 11% for the income bracket between €18,648 and €20,718
  • 12% for the income bracket between €20,718 and €22,788
  • 14% for the income bracket between €22,788 and €24,939
  • 16% for the income bracket between €24,939 and €27,090
  • 18% for the income bracket between €27,090 and €29,241
  • 20% for the income bracket between €29,241 and €31,392
  • 22% for the income bracket between €31,392 and €33,543
  • 24% for the income bracket between €33,543 and €35,694
  • 26% for the income bracket between €35,694 and €37,845
  • 28% for the income bracket between €37,845 and €39,996
  • 30% for the income bracket between €39,996 and €42,147
  • 32% for the income bracket between €42,147 and €44,298
  • 34% for the income bracket between €44,298 and €46,449
  • 36% for the income bracket between €46,449 and €48,600
  • 38% for the income bracket between €48,600 and €50,751
  • 39% for the income bracket between €50,715 and €110,403
  • 40% for the income bracket between €110,403 and €165,600
  • 41% for the income bracket between €165,600 and €220,788
  • 42% for the income bracket exceeding €220,788

The other tax rates used, in particular the scales of class 1a and 2, are deducted from this basic class 1 rate.

This rate is increased by the solidarity tax, which is currently 7%, or even 9% for taxable incomes of more than €150,000 in tax class 1 and 1a or more than €300,000 in tax class 2.

(Last updated on 31.01.2024)

How do I determine my tax rate?

To determine the amount of your tax rate, or your share of tax, apply the formula in the following tables from the official tax scale, where R is your total adjusted taxable income (i.e. after deducting everything you can from your gross income) which you multiply by your marginal tax rate (e.g. 20% if your income falls into the adjusted taxable income bracket between €29,250 and €31,350 in class 1) and from which you then have to subtract the flat-rate amount corresponding to your income bracket (last column).

For example: 29,250 x 0.20 – 3,780.72 = €2,069.

Luxembourg adds a solidarity tax (paid into the Employment Fund) to your rating, which is currently 7%, or even 9% for taxable income of over €150,000 in tax classes 1 and 1a, or over €300,000 in tax class 2.

Accordingly, (€2,069 x 1.07) = €2,213 is the amount of solidarity tax you owe on your taxable income of €29,250.

Don’t forget that the contribution to the long-term care insurance, which unlike social security contributions, is non-deductible, also influences the amount of disposable income after contributions (1.4% of gross income after deduction of an allowance corresponding to a quarter of the SSM).

You can also consult the tax calculator of the Direct Tax Administration to obtain this result
(http://www.impotsdirects.public.lu/baremes/personnes-physiques/index.html).

Class 1:

Class 1a :

Class 2 :

(Last updated on 31.01.2024)

Tax credits

Until 2016, each employee/retiree was also automatically credited with €300 per year under the employee or pensioner tax credit. From 2017 onwards, this tax credit has been made income-contingent and degressive. This wage earner tax credit (CIS) due to you, if any, therefore reduces your tax rate. The maximum amount for this is 600 euros from 2024 for a gross salary between €11,266 and €40,000. The CIS is no longer allocated above a gross annual salary of €80,000.

The single-parent tax credit, granted on application, amounts, where applicable for taxpayers in class 1a, to a maximum of €2,505 for an adjusted taxable income of less than €60,000. It is gradually reduced to 750 euros for an income of 105,000 euros. It is also proportional to the period of liability during the tax year (CIM 2023).

In support of taxpayers in possession of a tax form and receiving an income from a taxable salaried occupation in Luxembourg in the area of the minimum wage, a monthly tax credit (CISSM) chargeable through withholding on salaries and wages has been introduced. This tax credit amounts to €70 per month (maximum €840/year) if the gross monthly salary for a full month of full-time work is between €1,800 and €3,000. If this salary is between € 3,000 and € 3,600, the CISSM amounts to € 70 / 600 x (3,600 – gross monthly salary) per month.

If the employee did not work a full month and full time, his CISSM is prorated according to a fictitious gross monthly salary that the employee would have earned if he had been employed for a full month and on a full-time basis under the same remuneration conditions, as well as the number of hours actually worked. The tax credit is not awarded if the gross (notional) salary is below the predefined threshold and ceiling.

The CO2 tax credit for employees (CICO2) is granted to compensate for the levying of the carbon tax (on CO2). This tax credit at its full rate is worth 168 euros. It was introduced in 2024 on the basis of part of the CIS that already covered this carbon tax compensation. It is granted in full for a gross annual salary of €936 up to a salary of €40,000 per year and is then gradually reduced up to a gross salary of €80,000 per year, beyond which it is no longer due.

(last updated on 31.01.2024)