Family, Tax and Social Support Changes in Luxembourg from 1 January 2026

From 1 January 2026, several changes affecting families, taxpayers and social support will come into force in Luxembourg. These measures are part of the government’s officially published “Nouveautés 2026” and apply to everyday situations such as family taxation, retirement planning and support for older residents.

Family-Related Tax Measures

A new targeted tax credit will apply for parents in shared custody situations. Parents whose child does not live permanently in their household due to alternating residence arrangements, and who do not benefit from tax class 1a, may apply for a tax credit of up to EUR 922.50 per child. This measure applies specifically to the 2025 and 2026 tax years and is intended to address situations where parents contribute financially but do not qualify for existing family-based tax advantages.

This tax credit must be requested through the tax declaration process and is not applied automatically.

Tax Adjustments Supporting Working Individuals and Retirement Planning

Several tax adjustments entering into force in 2026 affect individuals nearing retirement or planning for long-term financial security.

A new tax allowance is introduced for individuals who are eligible for early old-age pension but choose to continue working until the legal retirement age of 65. This allowance allows a reduction of taxable income of up to EUR 9,000 per year, provided the eligibility conditions are met.

In parallel, the annual deductible ceiling for contributions to voluntary retirement savings contracts (third-pillar pension schemes) will increase from EUR 3,200 to EUR 4,500. This change applies to eligible retirement provision contracts and is intended to strengthen incentives for private pension savings.

Social Support Adjustments for Older Residents

As part of the 2026 measures, adjustments will be made to social support mechanisms for older residents. This includes updates to the complément pour personnes âgées (COMPA) and related pension-linked benefits. These changes are designed to reflect current living costs and ensure continued support for older residents with limited income.

The updated parameters apply from 1 January 2026 and are administered through the existing social security and pension systems.

Key Points for Residents

• New family-related tax credit for parents in shared custody arrangements
• Higher deductible limits for voluntary retirement savings
• New tax allowance for individuals who continue working beyond early pension eligibility
• Adjustments to social support mechanisms for older residents
• All measures apply from 1 January 2026 unless otherwise specified

Residents affected by these changes should review their tax situation ahead of the 2026 tax year and consult official guidance when submitting tax declarations or applying for benefits.

Official Sources

Government of Luxembourg – Nouveautés 2026 (official list of tax and social measures effective from 1 January 2026)
https://gouvernement.lu/fr/actualites/toutes_actualites/articles/2025/12-decembre/nouveautes-2026.html

Ministry of Family, Solidarities, Living Together and Childcare
https://mfamigr.gouvernement.lu/

Administration des Contributions Directes (Luxembourg tax administration)
https://impotsdirects.public.lu/

Caisse Nationale d’Assurance Pension (pensions and COMPA information)
https://cnap.public.lu/