Since 2018, Luxembourg has applied three tax classes (1, 1a and 2) according to the taxpayer's family situation. This system is set to disappear: draft law no. 8676 provides for the introduction of a single tax class on 1 January 2028.
This reform, one of the most significant in recent decades, will profoundly change household taxation. Even if the deadline may seem distant, its effects are best prepared for today.
Here are the broad outlines of the project, the winning and at-risk profiles, and the reasons to anticipate without waiting for 2028.
Why this reform?
Inspired by the 2023 government programme, the reform aims for greater fairness in a society that has changed profoundly. More than 67% of couples are now dual-earners and family structures have diversified. The three-class system is considered ill-suited to this reality.
What changes in practice
The draft law provides for several major changes:
- individual taxation rather than joint taxation;
- a doubling of the tax-free bracket, raised to €26,650 (compared with €13,230 currently);
- an increase in childcare deductions, up to €6,000 per child;
- a transition period of up to 20 to 25 years for around 15% of households, particularly couples with a large income gap.
Who wins, and who should stay vigilant?
Based on the current outline of the project:
- winners: single people, single parents and dual-earner couples with balanced incomes;
- caution: single-earner couples or those with a very large income gap, for whom a transitional regime will need to be chosen carefully.
Indicative timetable
According to announcements, the timetable is as follows:
- draft law submitted in early 2026;
- adoption expected by the end of 2026;
- entry into force on 1 January 2028;
- first application on 2028 income (declaration in 2029).
The reform represents an estimated cost of between €850 million and €1 billion per year for the Luxembourg State, making it one of the most ambitious tax measures of the legislature.
Why anticipate as early as 2026?
Even though entry into force is set for 2028, several reasons justify immediate preparation:
- simulate the impact of the reform on your household;
- review your wealth strategy (civil partnership, marriage, divorce, gifts);
- optimise current schemes while they still exist;
- consider the allowance for staying in working life (AMVP) if you are approaching retirement age.
Understanding the end of splitting
Today, class 2 relies on the "splitting" mechanism: the couple's incomes are added together then divided by two to apply the scale, which reduces the progressivity of the tax. With individualisation, each spouse will be taxed on their own income. For a couple with balanced incomes, the effect will often be neutral or favourable; for a single-earner couple, the loss of splitting will need to be offset by the new parameters (doubled tax-free bracket, enhanced deductions) or by the transitional regime.
The question, therefore, is not whether one "wins" or "loses" in absolute terms, but how to measure the combined net effect of all the measures on your household.
Cross-border workers: an impact not to be overlooked
Married cross-border workers currently benefit from class 2 under certain conditions. The reform therefore directly concerns them, all the more so since their Luxembourg taxation interacts with their French tax household. For them, anticipation is even more important because two tax systems overlap, and a change favourable on one side of the border may have unexpected effects on the other.
Prepare for the transition with CorExperts
A reform of this scale is prepared in advance, starting from a personalised analysis of your family and wealth situation. The earlier the diagnosis, the wider the room for optimisation. Our tax specialists help you model scenarios, compare regimes and make informed decisions.
To plan ahead with confidence, discover our tax advisory services or contact our experts.