Luxembourg taxes 2026: 3 new tax benefits you need to know

Discover Luxembourg's new tax measures in effect since January 2026: the AMVP deduction, shared custody bonus and higher 111bis pension contribution limits.

2026 brings good news for Luxembourg taxpayers. Three major tax measures came into force on January 1st and could save you several thousand euros. Here's everything you need to know.

1. The AMVP: up to €9,000 in deductions if you keep working

This is the big new measure this year. The Abattement de Maintien dans la Vie Professionnelle (AMVP), or "continued employment deduction", rewards those who choose to stay in work when they could already take early retirement.

How does it work?

If you meet the conditions for early retirement but decide to keep working until age 65, you can deduct up to €9,000 per year from your taxable income, that's €750 per month.

What's the impact on your taxes?

Let's look at a concrete example:

• You're single, in tax class 1
• Your taxable income is €50,000
• Without the AMVP, you pay €7,854 in taxes
• With the AMVP, you only pay €4,820

Savings: €3,034

(Source: Bill 8640, Chamber of Deputies)

This is one of the most significant deductions in Luxembourg's tax system.

How do you claim it?

You need to obtain a pension eligibility certificate from your pension body (CNAP for most employees). This certificate confirms that you meet the conditions for early retirement, even if you choose not to take it.

The deduction can be applied monthly on your tax card or annually through your tax return.

2. Shared custody: up to €922.50 bonus per child

This measure corrects a tax inequality for separated parents whose children live in shared custody.

Who's eligible?

If you're a parent with a child in shared custody and you:

• Share the family allowance with the other parent
• Don't benefit from tax class 1a

You can claim a tax bonus of €922.50 per child.

Watch out for income limits

This bonus is degressive:

• Taxable income < €67,400: you receive the full amount (€922.50)
• Income between €67,400 and €76,600: amount gradually reduced
• Income > €76,600: no bonus

For incomes between €67,400 and €76,600, the bonus equals 1/10th of the difference between €76,600 and your taxable income. For example, if you earn €70,000, the calculation is: (76,600 - 70,000) ÷ 10 = €660 bonus per child.

A temporary measure

Note: this bonus only applies for tax years 2025 and 2026. It's expected to be replaced by the new individual taxation system planned for 2028.

How do you apply?

The bonus must be claimed through your income tax return (form 100).

3. Pension savings (111bis): the limit rises to €4,500

The tax deduction ceiling for private pension contracts increases by 41%.

What's changing

	Before	From 2026
Annual limit per taxpayer	€3,200	€4,500
Limit for a couple	€6,400	€9,000

Why is this good news?

If you're single with a marginal tax rate of 35%, contributing €4,500 to your 111bis contract saves you €1,575 in taxes every year.

For a couple, the savings can exceed €4,000 per year.

What should you do now?

If you already have a private pension contract, consider increasing your monthly contributions to take full advantage of the new limit. The maths is simple: to reach €4,500 over the year, you need to contribute €375 per month.

If you don't have a 111bis contract yet, now's the time to seriously consider it. It's one of the best tax optimisation strategies available in Luxembourg.