Luxembourg's CSV-DP coalition presented a €30 billion budget on Monday that indexes tax brackets, cuts the surcharge, and pours €1.4 billion into housing — at the cost of a wider deficit through 2028.
The 2026 defence budget reaches roughly €882 million (1.43% of GNI), with NATO's 2% target now expected to be met around 2026 and a 5% trajectory under consideration by 2035 — accelerated, possibly, before this June's NATO summit.
The Grand Duchy is opening its growing defence budget to private savers, with a new sovereign bond whose interest income is exempt from personal tax.
Individuals investing in qualifying start-ups will be able to claim a credit equal to 20% of their investment, up to €100,000 per year — a deliberate nudge to deepen Luxembourg's domestic risk-capital pool.
Both agencies left the Grand Duchy's top-tier rating untouched, citing institutional strength and a dynamic financial sector — even as the social contribution rate rises from 24% to 25.5% in 2026.
The 2026 budget pushes Luxembourg's CO₂ price one step higher in a planned escalation that began at €20/tonne. The depreciation rate on sustainable energy renovations of rental housing rises from 6% to 10%.