Finance Minister Gilles Roth on Tuesday announced a new support measure for Luxembourg’s parents to be included in his tax reform package, which the government plans to finalise in time for the tax year 2028.
The new law will have a “greater focus on children,” Roth said. Parents with children up to the age of three will benefit from a tax reduction.
The new measure, dubbed the “infancy deduction” (abattement petite enfance), constitutes “support for each child aged 0-3 that parents will receive, whether they are married, in a civil union or single parents,” said the finance minister, quoted by RTL.
The tax reduction “has been welcomed by all parties”, he explained, and is included in the tax reform bill. That means from the tax year 2028, parents with children in early childhood will pay less tax.
The tax reform bill should be presented to the public in January 2026, Roth said.
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The new single tax bracket
The reform comes alongside the introduction of a new single tax class, class R, which will eliminate the current classes 1, 1a and 2, and will apply to taxpayers in the current tax classes 1 and 1a, as well as to newly married and unmarried couples.
As for married or single taxpayers, they will be able to continue to benefit from the tax advantages linked to tax class 2 “during a transition period of 20 years” after the single tax comes into force. Depending on the circumstances, these taxpayers will also be welcome to adopt the R tax bracket before the end of the 20-year transition period.
(This article was published by Contacto. Machine translated, with editing and adaptation by Alex Stevensson.)