How net pay is calculated in Luxembourg
Luxembourg salaries are paid in 12 monthly instalments. The employer deducts social security contributions and withholds wage tax using your tax card (fiche de retenue d’impôt), then pays out the tax credits with the salary. Several things changed in 2026: the employee pension contribution went up from 8% to 8.5%, the CO2 tax credit rose to €216 a year, and an index tranche on 1 June 2026 raised wages by 2.5% and the social minimum wage to €2,771.33 a month. The income tax scale itself was not indexed in 2026. Instead, a temporary tax credit (CIC 2026) is paid for June to December.
- Social contributions (11.55%, plus 1.4% for long-term care): pension 8.5%, health insurance 2.8% plus 0.25% for cash benefits, up to €13,856.63 a month (5 × the minimum wage). The long-term care contribution (assurance dépendance) is 1.4% on the whole salary, with no ceiling, after a monthly allowance of €692.83.
- Wage tax depends on your tax class: 1 (single), 1a (single parent, widowed or 64+) or 2 (married or civil partners taxed jointly). Rates rise from 0% to 42%, plus a 7% surcharge for the employment fund (9% on very high incomes). The tables already include the minimum allowances for work expenses (€540) and special expenses (€480). A commuting deduction of €99 per km beyond the first 4 km (at most €2,574) can be added to the tax card.
- Tax credits paid through payroll: CIS (up to €600 a year), CI-CO2 (up to €216), both phased out up to €80,000. On top of that, CISSM (€81 a month for full-time pay of €1,800 to €3,000, phased out by €3,600), CIM for single parents (up to €3,504) and CIC 2026 (up to about €27 a month, June to December).
Example: €5,000 a month, class 1
| Pension, health and cash-benefit contributions | −€577.50 |
| Long-term care contribution | −€60.30 |
| Wage tax (taxable €4,420) | −€719.70 |
| CIS + CI-CO2 | +€34.00 |
| Net per month | €3,676.50 |
From June to December 2026, the CIC adds another €22 a month. With the same salary, class 2 leaves €4,155.80 net, and class 1a with the single-parent credit leaves €4,177.30.
13th month and hourly wages
A 13th month is not required by law, but many collective agreements include one, for example in banking. It is taxed as non-periodic pay with a separate rate table. No 0.25% cash-benefit contribution is due on it. Hourly wages are converted using the Luxembourg convention of 173 paid hours a month for a 40-hour week: monthly gross = hourly rate × 173 × weekly hours ÷ 40. The 2026 minimum wage for unskilled workers aged 18 and over is €16.0192 an hour.
This calculator shows what your payslip says. Your annual tax return or the décompte annuel can change the result, for example because of other income, interest or insurance deductions. Cross-border workers are also taxed in Luxembourg, but different tax class rules apply to them, so the figures here are for residents.