Income Tax in Luxembourg (impôt sur le revenu)

Income tax is collected nationally by the Direct Tax Administration (Administration des contributions directes, ACD). You are a resident taxpayer if your tax domicile or habitual residence is in Luxembourg; residents are taxed on their worldwide income. Non-residents are taxed only on Luxembourg-source income and can, under conditions, choose to be treated like residents. Nationality plays no role. For employees, tax is withheld from salary by the employer according to the tax class shown on the tax withholding card (fiche de retenue d'impôt) issued by the ACD.

Rates and tax classes

The progressive scale applied from tax year 2025 is still in force in 2026 (tax class 1):

• 0% up to €13,230 of taxable income;
• then rising in small steps from 8% to 38% between €13,230 and €54,090;
• 39% from €54,090, 40% from €117,450, 41% from €176,160 and 42% above €234,870.

Your tax class changes how the scale is applied:

• Class 1: single people not in class 1a or 2.
• Class 1a: widowed people, people who receive the tax reduction for a child, and people aged 64 or over at the start of the year.
• Class 2: married couples and registered partners taxed jointly, and, for three years, recently widowed, divorced or separated people.

On top of the tax, a surcharge for the Employment Fund (Fonds pour l'emploi) applies: 7% of the tax, or 9% above an adjusted taxable income of €150,000 (classes 1 and 1a) or €300,000 (class 2).

Tax credits

• Employee tax credit (crédit d'impôt salarié, CIS), from 2026: €600 a year for gross pay between €11,266 and €40,000. It is lower below and above that range and stops at €80,000.
• CO2 tax credit for employees: €216 a year up to €40,000 of gross pay, then reduced. Both credits are paid through your payslip.
• Personal retirement-savings contracts are deductible up to €4,500 a year from 2026.

Filing a return

• Many employees are taxed only through withholding. You must file a return (form 100) in some cases, and you may file one to claim deductions and get back over-withheld tax, either with a full return or with an annual adjustment (form 163 R).
• The deadline is 31 December of the following year: for tax year 2025, returns can be filed from 7 April to 31 December 2026. Use MyGuichet.lu or send the form by post.
• Late filing can lead to a surcharge, late interest or a penalty, and the tax office can estimate your tax.

Common pitfalls for newcomers

• Foreign income that is exempt under a tax treaty still counts when your tax rate is calculated (the "exemption with progression" shown in the guichet.lu examples).
• Check your tax class after marriage, a registered partnership, a birth or a divorce. A wrong class means wrong withholding all year.
• Tax is not refunded automatically: to get back tax withheld in excess for your personal situation, you have to file a return or an annual adjustment.
• Married people and partners taxed jointly file one return covering all their income.

Official guidance: ACD: tax scale, ACD: Employment Fund surcharge, ACD: employee tax credit 2026, Guichet.lu: income tax return