Luxembourg votes for individual income taxation from 2028

Chamber adopts the single-class bill

The Chamber adopted Bill No. 8676 on 28 October, advancing a reform that would replace personal income-tax classes 1, 1a and 2 with individual taxation under a single U tariff from tax year 2028. The text also amends the General Tax Law of 22 May 1931, Tax Adaptation Law of 16 October 1934, Income Tax Law of 4 December 1967 and Employment Fund Law of 30 June 1976. The vote is not evidence that promulgation and publication have been completed.^[1][2]

Individual assessment with a transition

Under the voted text, each taxpayer, including people married or newly registered as partners from 1 January 2028, would be assessed on their own adjusted taxable income. The U tariff ranges from 0% below EUR 26,650 to a 42% marginal rate above EUR 234,800. Certain couples married or registered before 2028 could remain collectively assessed on a separate T tariff through tax year 2052, subject to residence and other conditions. Registered partners generally must request collective taxation and satisfy the bill's criteria.^[2]

Elections and withholding need forward planning

The text makes an election for individual assessment irreversible once made. For couples qualifying for the transition, the joint request for individual taxation is generally due by 30 November of the relevant year; a December request can affect that year and the next. A specific transition sets 30 November 2027 for some currently jointly assessed married taxpayers who want individual taxation and the U tariff reflected on their 2028 withholding card.^[2]

Do not change payroll before final law

MNE payroll and mobility teams should identify Luxembourg-resident and qualifying non-resident employees whose withholding cards may change, while avoiding household-level conclusions without the final law and individual facts. Couples may need to model both tariffs, particularly where incomes differ, but current-year withholding should not change on the basis of a voted bill. Monitor the second-vote waiver, promulgation, Legilux publication and tax-administration forms before configuring payroll or making an election.^[1][2]