Tax Rate (Taux d’Imposition)

Updated on 14/07/2026

Definition

The ‘tax rate (taux d’imposition)’ refers to the percentage of an individual’s or company’s income that is paid as tax. In Luxembourg, tax rates vary depending on factors such as income level, marital status, and tax class. The tax rate is progressive, meaning higher income is taxed at higher rates.

Frequently asked questions

How is the tax rate determined?
The tax rate is based on several factors, including your total taxable income, tax class, and whether you are filing as a single person or jointly with a spouse. The more you earn, the higher your tax rate becomes for the additional income.
What is the difference between marginal and effective tax rates?
  • Marginal Tax Rate: The rate applied to the last (highest) portion of your income.
  • Effective Tax Rate: The overall percentage of your income that you pay in taxes, which is typically lower than the marginal rate due to tax brackets and deductions.

What is the highest tax rate in Luxembourg?
In Luxembourg, the highest marginal tax rate for individuals is currently 42% (2025), applied to income exceeding a certain threshold. There is also a solidarity tax (contribution to employment fund) which may raise the total rate to 45.78%.
How to lower the tax rate?
It is posssible to reduce your effective tax rate by taking advantage of tax deductions and credits. For example, deductions may be available for childcare expenses, home loans, or contributions to a pension plan.
What is progressive taxation?
Luxembourg follows a progressive taxation system for individuals. This means that income is divided into brackets, with higher portions of income taxed at progressively higher rates. For example, income up to a certain limit may be taxed at a lower rate, while income above that limit is taxed at a higher rate.
Synonyms
Tax bracket income tax rate corporate tax rate tax percentage

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