News
Updated on
03/01/2024
Essential updates for January 2024
As we step into 2024, Luxembourg is introducing significant changes that will impact your payroll. Understanding these updates is necessary to navigate the financial landscape ahead. Let's explore the essential changes that take effect in January 2024.
1. Changes to the income tax scale:
The income tax scale is getting a makeover, and it's good news for taxpayers. There will be four indexed brackets, resulting in an adjustment of 10.38% compared to 2017 rates. For example, if you're in tax class 1 with a gross salary of 75.000 €, you could see a net gain of 1.095 € in 2024.
2. Introduction of the CI-CO2 tax credit:
For those with lower incomes, there's a new tax credit to help with the Co2 tax. It's a small boost to offset the environmental costs for individuals on lower incomes.
For annual incomes ranging from 936 € to 40.000 €, the CI-CO2 tax credit will amount to 144 € per year. In cases where the annual income falls between 40.001 € and 79.999 €, the CI-CO2 tax credit may vary within the range of 144 € to 0 € per year, calculated as [144 - (gross salary - 40.000) x 0.0036].
1. Changes to the income tax scale:
The income tax scale is getting a makeover, and it's good news for taxpayers. There will be four indexed brackets, resulting in an adjustment of 10.38% compared to 2017 rates. For example, if you're in tax class 1 with a gross salary of 75.000 €, you could see a net gain of 1.095 € in 2024.
2. Introduction of the CI-CO2 tax credit:
For those with lower incomes, there's a new tax credit to help with the Co2 tax. It's a small boost to offset the environmental costs for individuals on lower incomes.
Update: For annual incomes ranging from 936 € to 40.000 €, the CI-CO2 tax credit will amount to 168 € per year. In cases where the annual income falls between 40.001 € and 79.999 €, the CI-CO2 tax credit may vary within the range of 168 € to 0 € per year, calculated as [168 - (gross salary - 40.000) x 0.0042].
3. Reduced employee tax credit (CIS):
Starting in 2024, the maximum tax credit for employees is a little less, going from 696 € to 600 €. It's a change in the maximum benefit, but there's still some tax relief for employees.
For annual incomes ranging from 936 € to 11.265 €, the CIS tax credit may vary within the range of 0 € to 300 € per year, calculated as [300 + (gross salary - 936) x 0,029]. For annual incomes ranging from 11.266 € to 40.000 €, the CIS tax credit will amount to 600 € per year. In cases where the annual income falls between 40.001 € and 79.999 €, the CIS tax credit may vary within the range of 600 € to 0 € per year, calculated as [600 - (gross salary – 40.000) x 0,015].
4. Social parameter adjustments:
3. Reduced employee tax credit (CIS):
Starting in 2024, the maximum tax credit for employees is a little less, going from 696 € to 600 €. It's a change in the maximum benefit, but there's still some tax relief for employees.
For annual incomes ranging from 936 € to 11.265 €, the CIS tax credit may vary within the range of 0 € to 300 € per year, calculated as [300 + (gross salary - 936) x 0,029]. For annual incomes ranging from 11.266 € to 40.000 €, the CIS tax credit will amount to 600 € per year. In cases where the annual income falls between 40.001 € and 79.999 €, the CIS tax credit may vary within the range of 600 € to 0 € per year, calculated as [600 - (gross salary – 40.000) x 0,015].
4. Social parameter adjustments:
Employers will benefit from lower contribution rates to the Employer's Mutual Insurance, offering financial relief and freeing up funds to cover index-linked brackets. The accident insurance contribution rate is decreasing from 0,75% to 0,70%.
5. New meal voucher rules:
Changes are coming to meal vouchers. Paper vouchers are still OK until the end of 2024, and now the maximum value of meal vouchers can go up to €15.
6. More accessible sports leave:
Starting in 2024, more people will have access to sports leave. This is to encourage volunteering in sports clubs and make it easier for athletes to prepare for competitions. It's a step toward promoting healthier and more active lifestyles.
7. Farewell to the Conjoncture Tax Credit (CIC):
The Conjoncture Tax Credit, introduced in 2023, will end in January 2024. It was a temporary measure, and its expiration marks the end of a specific tax relief.
8. Indexation in 2024:
Employee wages will remain unchanged from the new year, with the last indexation dating back to September 2023.
Based on Statec's inflation estimates, a new index increase of 2,5% is expected in the summer, most probably in the third quarter of 2024.
Employee wages will remain unchanged from the new year, with the last indexation dating back to September 2023.
Based on Statec's inflation estimates, a new index increase of 2,5% is expected in the summer, most probably in the third quarter of 2024.
In the coming year, these changes present a dynamic blend of challenges and opportunities. At Salary.lu, we're committed to ensuring your payroll remains seamless and compliant with the latest regulations. Stay informed and let us guide you through these changes.