Towards the 2028 Tax Reform
At the beginning of 2026, members of Parliament have reopened the file on the reform of tax classes. Indeed, tax classes 1, 1a and 2 are expected to be abolished in favour of a single tax class: class “U”.
Bill 8676 proposes a system designed to benefit everyone: taxpayers currently in classes 1 or 1a will automatically move to class U, as this new class is more advantageous than the existing ones.
Indeed, the tax scale will be revised to become more favorable from the lowest income brackets. The tax-free threshold, previously set at €13,230, is expected to increase to approximately €26,650 per year. This represents about €2,400 more annually, regardless of income level in class 1. This measure is particularly beneficial for single individuals without children, who are currently the most heavily taxed.
Tax class 1a will also benefit from this reform, with an estimated annual tax saving of €550 and an increase of approximately €500 per year in the single-parent tax credit.
In class 2, it is announced that around 85% of households will also benefit from this reform. Retirees are also expected to gain from it.
However, the State plans a transitional period for class 2 households that would be disadvantaged by the new system. In such cases, couples will benefit from a 25-year period under the current class 2 system, during which they may opt to switch to class U at any time. This decision will be irreversible.
This new reform will also apply to cross-border workers.
https://gouvernement.lu/fr/actualites/toutes_actualites/communiques/2026/01-janvier/06-presentation-paquet-mesures.html
https://taxx.lu/fr/guide-de-la-declaration-d-impot/la-reforme-fiscale-2028-au-luxembourg
https://www.chd.lu/fr/node/3413
https://www.chd.lu/fr/finances-budget-impact-reforme-fiscale-fonds-place-novembre2025
At the beginning of 2026, members of Parliament have reopened the file on the reform of tax classes. Indeed, tax classes 1, 1a and 2 are expected to be abolished in favour of a single tax class: class “U”.
Bill 8676 proposes a system designed to benefit everyone: taxpayers currently in classes 1 or 1a will automatically move to class U, as this new class is more advantageous than the existing ones.
Indeed, the tax scale will be revised to become more favorable from the lowest income brackets. The tax-free threshold, previously set at €13,230, is expected to increase to approximately €26,650 per year. This represents about €2,400 more annually, regardless of income level in class 1. This measure is particularly beneficial for single individuals without children, who are currently the most heavily taxed.
Tax class 1a will also benefit from this reform, with an estimated annual tax saving of €550 and an increase of approximately €500 per year in the single-parent tax credit.
In class 2, it is announced that around 85% of households will also benefit from this reform. Retirees are also expected to gain from it.
However, the State plans a transitional period for class 2 households that would be disadvantaged by the new system. In such cases, couples will benefit from a 25-year period under the current class 2 system, during which they may opt to switch to class U at any time. This decision will be irreversible.
This new reform will also apply to cross-border workers.
https://gouvernement.lu/fr/actualites/toutes_actualites/communiques/2026/01-janvier/06-presentation-paquet-mesures.html
https://taxx.lu/fr/guide-de-la-declaration-d-impot/la-reforme-fiscale-2028-au-luxembourg
https://www.chd.lu/fr/node/3413
https://www.chd.lu/fr/finances-budget-impact-reforme-fiscale-fonds-place-novembre2025