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Luxembourg tax classes, and which one applies to you
Class 1, 1a or 2: the same gross salary produces a very different net depending on which box you land in.
Three classes, not ten
Luxembourg sorts taxpayers into three classes. Class 1 covers single people with no dependent children. Class 1a covers lone parents and people over 64, on a gentler scale. Class 2 is for married couples or partners taxed jointly, and is by far the most favourable, since the scale applies to household income split in two. Moving from 1 to 2 changes the net by several hundred euros a month on the same salary.
The married cross-border case
Since the 2018 reform, married non-residents are in principle placed in class 1, and reach class-2-equivalent treatment only by requesting assimilation to resident status. That option means declaring the household's worldwide income in Luxembourg — including a spouse's earnings in the country of residence — to set the applicable rate. It pays when only one spouse works in Luxembourg, and much less when both have comparable income elsewhere.
The withholding card
The class appears on the tax withholding card sent to the employer, who deducts at source accordingly. An out-of-date card or a wrong class shows up immediately on the payslip. Any life event — marriage, partnership, divorce, birth, death — must therefore be reported to the Administration des contributions directes, which reissues the card. Over-withholding is recovered through the return, but with a year's cash-flow lag.
Simulate before deciding
Choosing between individual taxation and assimilation is not a rule of thumb: it depends on the gap between the two household salaries, the country of residence and the deductions available. The Administration publishes an online simulator, and the calculation is worth redoing at every notable change in income. Scales move with indexation and reform: treat the orders of magnitude here as orientation, not costing.
