Individual taxation in Luxembourg: a major tax reform on the horizon

Luxembourg: individual taxation from 2028, end of classes 1, 1a and 2. Discover the impacts for taxpayers.

The Luxembourg government is preparing a major tax reform: the end of tax classes (1, 1a and 2) and the introduction of an individualized taxation system. Presented by Finance Minister Gilles Roth, this reform aims to modernize the tax system by taking into account current social realities and ensuring greater equity among taxpayers.

Objective: fairer taxation adapted to modern lifestyles

Today, income tax in Luxembourg is calculated according to three tax classes (1, 1a and 2), which take into account family situation and marital status. The Minister wants to eliminate this distinction and establish an individualized system that no longer depends on marriage or civil partnership. The main idea: no one should be disadvantaged or advantaged based on whether they are married, in a civil partnership, or single.

A single tax class: the "R" scale

The new system will be based on a single tax scale, called the "R" scale, inspired by the current class 1a scale. This scale will apply to any person currently falling under classes 1 and 1a, as well as to newly married or civil partnership couples from the reform's entry into force. Couples already married or in civil partnerships who currently benefit from class 2 advantages will be able to keep these advantages during a transitional period of 20 years. However, they may voluntarily opt for the "R" scale at any time during this period, with no possibility of reverting afterwards.

Significant cost, but expected purchasing power gain

The cost of the reform is estimated at between 800 and 900 million euros per year. This amount could be partially offset by index tranches and by the increase in taxpayers' purchasing power.