Tax classes 1, 1a and 2

How the classes work

Luxembourg has a single progressive income-tax scale that applies to every taxpayer, but the bracket boundaries shift with the class. In practical terms, the class determines which slice of your income falls in which marginal bracket. Class 1 has the least favourable structure: a single taxpayer reaches the higher brackets earlier. Class 1a sits in between, with adjusted thresholds that reflect the presence of a dependent child or, for some older taxpayers, a recognition of changed circumstances. Class 2 effectively spreads taxable income across the fiscal household, which is why it tends to favour single-earner households where one spouse has no income or very low income.

The class on your tax card (carte d'impôt / Steuerkarte) drives the monthly retention at source by your employer. That retention is an advance against the final bill, calculated each month against a daily, weekly or monthly bracket grid. At year end, the annual declaration on form 100 reconciles the advance against the real situation, including extra income, deductions, household composition changes and credits that the employer cannot apply automatically.

The four-line summary: one scale, three class entry points, monthly retention by class, annual reconciliation by declaration. Once you have those four ideas, the rest is detail — and most of the detail is in the LIR, in the ACD's brochure on tax classes, and in the Guichet.lu pages summarising the procedure for taxpayers.

Who falls into which class

The allocation is mechanical for most taxpayers and reflects civil status more than income.

Class 1

Single Luxembourg taxpayers with no dependent children, below the age threshold defined in the LIR. The default class for the majority of single arrivals in the early career years.

Class 1a

Three sub-populations: single taxpayers with a dependent child for whom they receive child benefit (allocation familiale) or qualify under the equivalent modération d'impôt pour enfant; widowed taxpayers after the class 2 grace period has expired; and single taxpayers above a specific age set by the LIR [verify: current age cut-off — see the LIR consolidated text on Légilux]. The class 1a structure is more favourable than class 1 but less favourable than class 2.

Class 2

Married couples, civil partners (PACSed under the loi du 9 juillet 2004) who request it and meet the conditions, and recently widowed taxpayers during the grace period defined in the LIR. The defining characteristic of class 2 is the joint or separate treatment of the household income, which makes class 2 itself a choice architecture rather than a single fixed regime.

Class 2 — joint vs separate

The 2018 reform — implemented progressively across the 2018 and subsequent tax years — added pure individual taxation as an option for married couples and PACSed partners in class 2. Until then, married couples were effectively required to file jointly. The reform was driven by an observation that joint filing penalises dual-career couples with similar incomes, because the joint scale taxes the higher slice of one income at the marginal rate of the household total, not at the marginal rate of that individual's own income.

Three regimes exist within class 2:

• Imposition collective — joint filing. Incomes are added together, the joint scale is applied, and the resulting tax is recorded against the couple. This is the default for married Luxembourg residents.
• Imposition individuelle pure — each spouse's income is taxed separately under the class 1 scale, but the choice of class 2 status preserves access to certain household-level deductions. The form 100 has a specific election box for this option.
• Imposition individuelle avec réallocation — a hybrid: each spouse is taxed separately, but they can reallocate part of the household income between them up to a specified limit, to smooth the marginal rate. Useful when one spouse has a slightly higher income and the couple wants to capture some of the benefit of joint filing without the full pooling.

The choice between the three is made each year on the form 100, and is not binding for future years — the household can switch annually as circumstances change. Practically, single-earner households with one zero-income spouse almost always benefit from joint filing; two-earner households with similar incomes often benefit from pure individual filing; the hybrid sits in between. Modelling both before filing is the only way to be certain in a borderline case.

Non-resident access

Non-residents who work in Luxembourg are taxed on Luxembourg-source income only, and by default fall into class 1 regardless of marital status. The 2018 reform also rewrote the conditions under which a non-resident can be "assimilated" to a resident for tax purposes and therefore opt into class 2.

Two main routes exist:

• At least 90% of the household's worldwide income is taxable in Luxembourg. This is checked at the level of the whole household — a non-resident married couple with one spouse working in Luxembourg and the other earning a meaningful income at home will often fail the 90% test.
• The cross-border professional-income exception: residents of one of the three neighbour states whose Luxembourg salary represents at least a specified fraction of their total professional income can apply, with documentation, to be assimilated even if the 90% household test is not met. The thresholds and conditions are set out in the LIR and detailed in ACD circulars [verify: current fraction and procedure — see the LIR consolidated text].

The assimilation is requested on the form 100 (the non-resident version, model 100 F), with supporting documentation from the home country's tax authority. The reward is access to class 2 (with all its sub-options) and to certain resident-only deductions. For cross-border workers in particular, the maths is often worth doing. See the dedicated cross-border tax guide for the interaction with day thresholds and social security.

Year-of-event effects

Civil status changes inside a tax year do not pro-rate. The Luxembourg system applies the class for the year of the event, not from the date of the event itself. Four events matter most:

Marriage

The couple is placed in class 2 for the full tax year, regardless of when the wedding fell. The ACD issues a new tax card with the new class as soon as the marriage is registered. The annual declaration reconciles any retention applied earlier in the year under the previous class.

Divorce

The couple loses class 2 for the year in which the divorce becomes final. From that year onwards each spouse falls back into class 1 or class 1a depending on the presence of dependent children. The year of the divorce is class 1 (or 1a) for the whole year, not pro-rata.

Death of a spouse

The surviving spouse keeps class 2 for the year of death and for a grace period defined in the LIR. After the grace period expires, the surviving spouse moves to class 1a (in most cases).

Arrival of a child

The arrival of a first dependent child shifts a single taxpayer from class 1 to class 1a from the tax year of the child's arrival. Married couples already in class 2 are not affected by the class itself, but the modération d'impôt pour enfant applies as a separate credit.

Worked example (qualitative)

The most useful exercise is qualitative. Take a single gross annual salary — say, the median Luxembourg salary — and trace it through each class without quoting current bracket numbers (which move and which are best read directly from the ACD's published table).

In class 1, that salary hits the higher marginal brackets earliest. The retention on the monthly payslip is the highest of the three classes for the same gross, and the annual tax bill is therefore the highest. This is the baseline.

In class 1a, the same salary moves through a more favourable bracket grid. The retention is materially lower than in class 1 — the gap matters most for taxpayers in the middle of the income distribution, less at very low and very high incomes.

In class 2 with joint filing, if the second spouse has zero income, the household effectively spreads the same gross across the joint scale: the retention is significantly lower than class 1 and noticeably lower than class 1a. If the second spouse also earns a meaningful income, the joint scale starts to push both incomes into higher brackets — and pure individual filing inside class 2 often gives a better outcome.

The direction of the differences is robust. The exact magnitude depends on the bracket boundaries in force in the tax year you are modelling. For an actual euro calculation, use the ACD's online simulator (available on Guichet.lu) or feed your numbers into the official bracket tables for the year. We deliberately avoid quoting figures that the legislator changes — see also the cost-of-living page for the gross-to-net context.

Edge cases

PACS / civil partnerships

Partners under a Luxembourg PACS (or an equivalent foreign civil partnership recognised under the loi du 9 juillet 2004) can request joint assessment in class 2 if they declare jointly and meet the conditions. The request is made on the form 100 and applies for the tax year. The same individual-filing options inside class 2 are available to PACSed partners.

Widowed taxpayers

The grace period during which a widowed taxpayer keeps class 2 is defined in the LIR. After the grace period expires, the taxpayer typically moves to class 1a. The exact length of the grace period and the conditions are best confirmed against the LIR consolidated text on Légilux [verify].

Separated couples mid-year

Separation without a final divorce judgement does not, in itself, change the class. As long as the marriage is legally in place at the end of the tax year, class 2 stands. Once the divorce is final, the year of the final judgement is fully out of class 2.

One resident, one non-resident spouse

A common case in cross-border life. The resident spouse can file alone as a non-resident-spouse household, or both can request assimilation if the conditions are met. The non-resident spouse's foreign income is taken into account for the exemption-with-progression mechanism, which can lift the effective marginal rate of the resident spouse. The 90% test in particular often falls one way or the other depending on the foreign-income year.

Expat couples with one remote spouse

If both spouses are non-residents and only one works in Luxembourg, the household needs to think carefully about assimilation versus class 1. The right answer depends on the share of household income that is Luxembourg-taxable and on the structure of deductions in the home country. For couples on the impatriate regime, the interaction with the regime itself is detailed in the impatriate guide.

What this means in practice

Three concrete steps before the next filing:

1. Check your current carte d'impôt. The class on the card is shown explicitly. If your civil status has changed (marriage, PACS, birth of a child, divorce, bereavement), and the card has not been reissued, request a corrected one from the ACD bureau d'imposition.
2. Model two scenarios. For class-2 households, run the form 100 once with joint filing and once with pure individual filing — the simulator on Guichet.lu accepts both. The difference is sometimes small and sometimes thousands of euros; you cannot know without the calculation.
3. File before the deadline. The form 100 deadline is set each year by the ACD. Filing late forfeits options that need an active election — including the choice between joint and individual taxation, which has to be on the timely-filed form 100.

FAQ

Which tax class am I in if I'm single with no children?

Class 1. It is the baseline class for unmarried taxpayers with no dependent children who are below the age threshold defined in the LIR. Class 1 has the least favourable bracket structure of the three.

What is class 1a and who falls into it?

Class 1a covers single taxpayers with a dependent child, single parents, widowed taxpayers (after the class 2 grace period expires) and single taxpayers above an age threshold set by the LIR. It sits between class 1 and class 2 in terms of tax burden.

Do married couples automatically get class 2?

Married Luxembourg residents are placed in class 2 by default. Civil partners (PACSed) can opt in if they meet the conditions. Non-resident married couples need to meet the assimilation conditions (at least 90% of household worldwide income taxed in Luxembourg, or the cross-border professional-income threshold) to choose class 2.

Can a married couple file separately in Luxembourg?

Yes. Since the 2018 reform, married couples can choose between joint taxation (imposition collective) and pure individual taxation (imposition individuelle pure). The choice is made annually on the form 100. Joint filing tends to favour single-earner households; individual filing can favour two-earner households with similar incomes.

What happens to my tax class if I get married mid-year?

The class changes for the full tax year of the marriage, not from the date of the wedding — Luxembourg applies the class for the year of the event. The ACD issues a new tax card, and the annual declaration reconciles the difference.

My tax card shows the wrong class. What do I do?

You can request a corrected card (carte d'impôt / Steuerkarte) from the ACD bureau d'imposition that handles your file. The class on the card determines the monthly withholding, but the annual declaration ultimately reconciles — so a wrong card means a refund or a top-up at filing time rather than a permanent loss.