Luxembourg Tax Calculator (2026)
Income tax rates and take-home pay for Luxembourg
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Luxembourg Income Tax Brackets (2025)
| Bracket | Income Range | Rate |
|---|---|---|
| Zero rate | €0 - €13,230 | 0.0% |
| 8% | €13,230 - €15,435 | 8.0% |
| 9% | €15,435 - €17,640 | 9.0% |
| 10% | €17,640 - €19,845 | 10.0% |
| 11% | €19,845 - €22,050 | 11.0% |
| 12% | €22,050 - €24,255 | 12.0% |
| 14% | €24,255 - €26,550 | 14.0% |
| 16% | €26,550 - €28,845 | 16.0% |
| 18% | €28,845 - €31,140 | 18.0% |
| 20% | €31,140 - €33,435 | 20.0% |
| 22% | €33,435 - €35,730 | 22.0% |
| 24% | €35,730 - €38,025 | 24.0% |
| 26% | €38,025 - €40,320 | 26.0% |
| 28% | €40,320 - €42,615 | 28.0% |
| 30% | €42,615 - €44,910 | 30.0% |
| 32% | €44,910 - €47,205 | 32.0% |
| 34% | €47,205 - €49,500 | 34.0% |
| 36% | €49,500 - €51,795 | 36.0% |
| 38% | €51,795 - €54,090 | 38.0% |
| 39% | €54,090 - €117,450 | 39.0% |
| 40% | €117,450 - €176,160 | 40.0% |
| 41% | €176,160 - €234,870 | 41.0% |
| 42% | €234,870+ | 42.0% |
Sickness insurance
| Bracket | Income Range | Rate |
|---|---|---|
| 2.8% | €0+ | 2.8% |
Capped at €4,545 per year
Pension insurance
| Bracket | Income Range | Rate |
|---|---|---|
| 8% | €0+ | 8.0% |
Capped at €10,814 per year
Dependency contribution
| Bracket | Income Range | Rate |
|---|---|---|
| 1.4% | €8,045+ | 1.4% |
Solidarity tax
| Bracket | Income Range | Rate |
|---|---|---|
| 7% solidarity surcharge | €0+ | 7.0% |
Key Facts
Tax Year
2025
Currency
EUR
Top Rate
42.0%
Brackets
23 brackets
Tax-Free Threshold
€13,230
Social Contributions
3 items
Assumptions
- · Model uses Tax Class 1 (single person) as default representative employee.
- · Solidarity tax of 7% applied to income tax liability (standard rate for incomes up to EUR 150,000).
- · Employee tax credit modeled as tiered credit phasing from EUR 600 at low income to EUR 0 at higher income.
- · Social security contributions (sickness 2.80%, pension 8%) are deductible from gross income before income tax calculation.
- · Dependency contribution (1.4%) applied to gross income reduced by EUR 8,045.32 annual ceiling (EUR 675.94/month).
- · Minimum standard employment deduction of EUR 540 included in income-based deductions.
- · Commuting expense deduction limited to EUR 2,574 per year; modeled as percentage of income with maximum cap.
- · Life/disability insurance and loan interest deduction of EUR 672 per year included as flat standard deduction.
- · Employee contributions to employer pension schemes up to EUR 1,200/year are tax-deductible.
- · CISSM (minimum wage credit) not modeled as it applies only to gross monthly salary EUR 1,800–EUR 3,600; falls outside typical salary-comparison use case.
- · CO2 tax credit of EUR 192 per year included as flat credit.
- · Personal allowance for jointly taxable spouses (EUR 4,500) not applicable to single default person.
- · Non-resident rules and extraordinary charges deductions excluded as outside default resident employee scope.
- · Tax brackets simplified from index-adjusted 2025 scale; rates applied progressively.
- · All figures reflect 2025 tax year indexation.
Frequently asked questions
How much income tax do I pay in Luxembourg if I earn EUR 40,000 per year?
Luxembourg uses a progressive tax system with 23 tax brackets ranging from 0% to 42%. On a EUR 40,000 salary, your income up to EUR 13,230 is tax-free, then you pay increasing rates (8% to 26%) on income in higher brackets. After accounting for social security contributions (sickness 2.8% and pension 8%), standard employment deductions, and the employee tax credit of EUR 600, your effective tax rate would be significantly lower than the marginal rate.
What social security contributions do I need to pay as an employee in Luxembourg?
As an employee in Luxembourg, you pay three main contributions: sickness insurance at 2.8%, pension insurance at 8%, and a dependency contribution at 1.4% (on income above EUR 8,045 annually). The sickness and pension contributions are deductible from your gross income before income tax is calculated, which reduces your overall tax burden. These contributions are capped at EUR 4,544.94 for sickness and EUR 10,814.44 for pension insurance.
Do I get any tax credits or deductions in Luxembourg?
Yes, Luxembourg offers several tax benefits including an employee tax credit worth up to EUR 600 (which phases out between EUR 30,000 and EUR 50,000 income), plus a EUR 192 annual CO2 tax credit. You also receive a standard employment expense deduction of EUR 540, can deduct commuting expenses up to EUR 2,574 per year, and can claim EUR 672 for life/disability insurance and loan interest. Additionally, a 7% solidarity surcharge applies to your income tax liability.
What is the highest tax rate in Luxembourg and when do I pay it?
The highest marginal income tax rate in Luxembourg is 42%, which applies to income above EUR 234,870 per year. Before reaching the top rate, you progress through 22 other brackets, with rates gradually increasing from 8% at EUR 13,230 of income. The progressive bracket system means you only pay the highest rate on income that falls within that bracket, not on your entire income.
Are there any regional or local taxes in Luxembourg I should know about?
Luxembourg does not have regional or state-level income taxes; the national tax system applies uniformly throughout the country. This makes Luxembourg's tax situation simpler than many other European countries, as you only need to consider the national income tax brackets, social contributions, and the solidarity surcharge when calculating your tax liability.
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