Luxembourg Tax Guide
Progressive Tax Scale: 2024 vs 2025 Comparison
The table below outlines the income brackets and marginal tax rates for Class 1. These thresholds were increased on January 1, 2025, to offset the impact of inflation.
| Rate | 2024 Bracket (in €) | 2025 Bracket (in €) |
|---|---|---|
| 0 % | 0 – 12,438 | 0 – 13,230 |
| 8 % | 12,438 – 14,508 | 13,230 – 15,435 |
| 9 % | 14,508 – 16,578 | 15,435 – 17,640 |
| 10 % | 16,578 – 18,648 | 17,640 – 19,845 |
| 11 % | 18,648 – 20,718 | 19,845 – 22,050 |
| 12 % | 20,718 – 22,788 | 22,050 – 24,255 |
| 14 % | 22,788 – 24,939 | 24,255 – 26,550 |
| 16 % | 24,939 – 27,090 | 26,550 – 28,845 |
| 18 % | 27,090 – 29,241 | 28,845 – 31,140 |
| 20 % | 29,241 – 31,392 | 31,140 – 33,435 |
| 22 % | 31,392 – 33,543 | 33,435 – 35,730 |
| 24 % | 33,543 – 35,694 | 35,730 – 38,025 |
| 26 % | 35,694 – 37,845 | 38,025 – 40,320 |
| 28 % | 37,845 – 39,996 | 40,320 – 42,615 |
| 30 % | 39,996 – 42,147 | 42,615 – 44,910 |
| 32 % | 42,147 – 44,298 | 44,910 – 47,205 |
| 34 % | 44,298 – 46,449 | 47,205 – 49,500 |
| 36 % | 46,449 – 48,600 | 49,500 – 51,795 |
| 38 % | 48,600 – 50,751 | 51,795 – 54,090 |
| 39 % | 50,751 – 110,403 | 54,090 – 117,450 |
| 40 % | 110,403 – 165,600 | 117,450 – 176,160 |
| 41 % | 165,600 – 234,870 | 176,160 – 234,870 |
| 42 % | Above 220,788 | Above 234,870 |
Tax Classes and Splitting
Your household structure modifies how this tax scale is applied:
- Class 1: Standard tax scale (single individuals).
- Class 1a: Specific adjustments for single parents or senior citizens.
- Class 2: Application of tax splitting. The joint global income is divided by two, the tax is calculated on that half, and then multiplied by two. This effectively mitigates the impact of progressive tax brackets for married or civil partnership couples.
Solidarity Tax (Employment Fund Contribution)
An additional surcharge is applied on top of the calculated gross tax amount:
- 7 % of the tax due as a general rule.
- 9 % if the taxable income exceeds:
- €150,000 (Class 1 and 1a).
- €300,000 (Class 2).
2025 Tax Reform Details
As of January 1, 2025, tax bracket thresholds were increased by **6.37%**. This adjustment corresponds to the integration of 2.5 additional index tranches. Combined with the 4-tranche adjustment implemented in 2024, the Luxembourg government has successfully neutralized a significant portion of inflation, protecting the purchasing power of its residents.
Dividends, Capital Gains, and SCSp
Income from movable capital (dividends) is generally subject to a 15% withholding tax, with a potential 50% exemption available under specific conditions. Capital gains from the sale of shares are fully exempt after a 6-month holding period (provided the shareholding is less than 10%). Finally, for tax-transparent entities like the SCSp, taxation applies directly at the partner level according to their individual marginal tax rate.