Luxembourg 2026 cost changes: CO2 tax rises to EUR 45 and tobacco excise goes up

Luxembourg's 2026 cost-of-living changes include two measures many households will notice in everyday prices: a higher CO2 tax and higher tobacco excise. The government says the carbon price will reach EUR 45 per tonne of CO2 from 1 January 2026, in line with the National Energy and Climate Plan.

The CO2 tax applies through the energy products concerned, so the effect is felt indirectly rather than as a separate bill. To soften the impact on low- and middle-income households, the CO2 tax credit rises by EUR 24, bringing the total to EUR 216.

The tobacco change is more visible at the counter. Excise duties on cigarettes and fine-cut rolling tobacco increase from 1 January 2026. All else being equal, the government says this means about EUR 0.30 more for a pack of 20 cigarettes and EUR 0.40 more for a 50g pack of rolling tobacco.

The two measures sit at the intersection of tax, health, climate and household budgets. The CO2 tax is framed as part of Luxembourg's climate pathway, while the tobacco excise increase follows a long-standing public-health logic of raising the price of smoking products. For consumers, the key point is timing: both changes start at the beginning of 2026.

Search demand is likely to be practical: people will ask how much the CO2 tax is, what the CO2 tax credit is worth, and why tobacco prices rose. The answer is that the 2026 package raises the carbon price but also raises the compensating credit, while tobacco excise moves by fixed amounts per standard pack.