Tax Classes in Luxembourg (1, 1a, 2) Explained: Which One Are You In?

If you work in Luxembourg, one short code on your withholding tax card (fiche de retenue d'impot) quietly decides how much income tax comes out of every payslip: your tax class. Luxembourg currently uses three classes - 1, 1a and 2 - and which one you are in depends mainly on your family situation. Here is who falls where, what it means for your tax bill, and the reform that will scrap the system from 2028.

The three tax classes

The Administration des contributions directes assigns every resident taxpayer to one of three classes:

• Class 1 - single people with no children, plus divorced or separated people and most non-resident workers. It is the default class and carries the heaviest tax for a given income.
• Class 1a - a more favourable middle class for single parents who receive child tax relief, widowed people, and people who have completed their 64th year at the start of the tax year (in practice, those aged 65 and over).
• Class 2 - married couples and registered partners (PACS) taxed jointly. It also temporarily covers people whose marriage ended through death (within 3 years) or divorce/separation (within 3 years) under transitional rules.

Why class 2 is usually the best deal

Class 2 applies income splitting: the couple's combined income is halved, taxed at the lower progressive rate that applies to the smaller amount, and the result is doubled. Because Luxembourg's tax scale is steeply progressive, splitting can cut a couple's bill substantially - especially when one partner earns much more than the other. Class 1a sits between the two, using a softer scale than class 1 to ease the burden on single parents and older taxpayers.

How the tax itself is calculated

The class decides which scale applies; the scale then sets the rate. For 2026, income tax is progressive across 23 brackets, according to PwC's Luxembourg tax summary:

• The first EUR 13,230 of taxable income is tax-free (0%).
• Rates climb in steps to a top marginal rate of 42%, which applies to income above EUR 234,870.
• On top of the income tax sits a contribution to the employment fund (the solidarity surcharge) of 7% of the tax due - rising to 9% for adjusted taxable income above EUR 150,000 in classes 1 and 1a, or above EUR 300,000 in class 2.

That pushes the highest combined marginal rate to roughly 45.78% (42% plus the 9% surcharge on the tax). The same brackets apply to everyone; what changes between classes is how your income is mapped onto them.

Where to find your class

Your class appears on your withholding tax card, issued automatically and sent to your employer, who uses it to deduct tax at source. A first job always starts you in class 1; the card is updated when your circumstances change. If you marry, enter a PACS, have a child, are widowed or turn 65, you can ask the tax office to correct your class so you stop overpaying. When both spouses work in Luxembourg, the higher, more stable salary carries the main card showing class 2.

Cross-border workers: the 90% rule

Most of Luxembourg's workforce commutes from France, Belgium and Germany. A married non-resident is placed in class 1 by default, which can be far more expensive than the class-2 treatment a resident couple enjoys. To get the joint, resident-style treatment, they must request assimilation to residents. Per guichet.public.lu, you qualify if at least 90% of your worldwide income is taxable in Luxembourg, or if your net income not taxed in Luxembourg stays below EUR 13,000. Belgian residents have an alternative route where 50% of the household's professional income is taxable in Luxembourg. Up to 50 days worked abroad for a Luxembourg employer still count toward the 90% threshold.

The reform: one tax class from 2028

The whole class system is on the way out. On 6 January 2026 the government tabled draft bill 8676, which would replace classes 1, 1a and 2 with a single tax class ("Tarif U") from tax year 2028, moving Luxembourg toward individual taxation as the default. Couples married or partnered before 2028 keep access to joint taxation under a separate schedule ("Tarif T") during a long transition lasting until 2052. The package - estimated to cost the state between EUR 850 and 950 million a year - also raises the tax-free band and adds new family allowances. It is still a draft law: nothing changes for 2026 or 2027, and details may shift before adoption. For now, classes 1, 1a and 2 remain in force.

Last reviewed: June 2026. Rates and thresholds change - check the official sources linked above for the latest.