Global Daily Tax News, Luxembourg Announces Tax Breaks In 2026 Budget, (Oct 17, 2025)

Luxembourg's Government set out plans for reform of the personal tax system in its 2026 Budget.

The Government has pledged to waive tax on single parents with gross income up to EUR52,400, and from 2026 provide a EUR922.5 tax bonus per child, per year, for parents not in tax class 1a.

The Government also confirmed plans to introduce a uniform tax bracket, which will benefit 85 percent of taxpayers. The other 15 percent of taxpayers will benefit from a "generous transitional regime", the Government said.

Corporate tax will be reduced by one percentage point for exchange traded funds, with a further cut proposed for the 2027 tax year. The Government has also committed to enhancing the tax rules for carried interest, earned by fund managers, to boost the territory's appeal as an investment fund domicile.

Finally, the Government announced plans to offer a tax credit for investments in innovative start-up companies, worth up to 20 percent of the invested capital, capped at EUR100,000 per tax year. In addition, a new regime will be introduced for employee share schemes for start-up companies.