Tax Classes in Luxembourg: Class 1, 1a and 2 Explained (2026)

Luxembourg assigns every employee and pensioner a tax class — 1, 1a or 2 — that sets how much income tax is withheld from their pay each month. The class depends on your family situation, not your salary: class 1 is for single people without children, class 1a for single parents, the widowed and the over-65s, and class 2 for married couples and registered partners who are taxed jointly. Class 2 is the most favourable, because the household's combined income is split in two before Luxembourg's progressive scale is applied, which lowers the effective rate. Your class is printed on your fiche de retenue d'impôt (tax card), issued by the Administration des contributions directes (ACD).

Who falls into tax class 1, 1a or 2?

Your class is decided by your civil status on 1 January of the tax year and by whether you have dependent children:

• Class 1 — single, or divorced or widowed for more than three years, with no dependent children. It has the least favourable brackets.
• Class 1a — single parents entitled to the child bonus, people aged 65 or over at the start of the year, and the recently widowed (within three years of the death). It sits between class 1 and class 2.
• Class 2 — married couples and PACS partners who opt for joint taxation, provided they are not permanently separated. Non-resident couples can also reach class 2 through "assimilation" (see below).

Why tax class 2 lowers a couple's tax bill

Class 2 uses income splitting. The tax office adds both partners' income together, divides it by two, applies the progressive scale to that half, then doubles the result. Because Luxembourg's rates climb from 8% to 42%, taxing two smaller halves instead of one large total keeps more income in the lower bands.

The effect is large. On the published scale, a taxable income of €30,000 produces about €1,998 of income tax. A couple with €60,000 of combined taxable income in class 2 is therefore taxed as two lots of €30,000 — roughly €4,000 in total. The same €60,000 taxed in class 1, with no splitting, would cost about €11,300. That is a difference of some €7,300 a year, and it widens as income rises. (Figures are illustrative, before the 7% employment-fund surcharge and social contributions.)

In 2026 the first €13,230 of income is tax-free; the 8% entry rate applies above that, and the top rate of 42% only from €234,871.

How to change your class — marriage, PACS, divorce and cross-border work

Most changes are handled once the tax office knows, but the rules differ by status:

• Marriage — resident spouses move to class 2 automatically; the ACD reissues the tax card, and the higher earner is taxed progressively while the second card applies a flat 15% withholding.
• PACS (registered partnership) — partners stay in class 1 during the year and only obtain class 2 by requesting joint taxation after year-end, filing a form 100 return. The partnership must have lasted the whole tax year, and the return is due by 31 December of the following year.
• Divorce or death — you keep the class 2 rate for a transitional period (currently three years) before moving to class 1 or 1a.
• Moving to Luxembourg — tell the RTS tax office so a correct card is issued, and report changes promptly so the withholding stays right.

Married and PACS couples can also choose individual taxation instead of joint class 2, with or without a reallocation of income between them — useful when both earn similar amounts. The choice is made on the tax return.

Cross-border (frontalier) workers are taxed only on their Luxembourg income and, by default, sit in class 1 without resident deductions. They can be assimilated to residents — unlocking class 2 and the full range of deductions — if at least 90% of their worldwide income is taxable in Luxembourg, or if their income not taxable in Luxembourg is below €13,000. Belgian residents qualify if more than 50% of the household's professional income comes from Luxembourg. The first 50 days worked outside the country still count as Luxembourg workdays for the 90% test.

What Bill 8676 changes from 2028

On 6 January 2026 the government presented Bill 8676, which would abolish the three-class system and replace it with a single unified tax class, "Tarif U", applied to everyone regardless of marital status. The tax-free threshold would roughly double, from €13,230 to €26,650, and the number of brackets would fall.

Nothing has changed yet. The bill is a draft still going through parliament; classes 1, 1a and 2 remain fully in force for 2026 and 2027. If adopted, the single class would apply from the 2028 tax year, with a 25-year transition (to 2052) protecting couples currently in class 2, who would keep an equivalent "Tarif T" treatment. Couples wanting individual taxation from 2028 could opt out before 30 November 2027. Until the law is passed, the class on your 2026 tax card is what determines your withholding.