Tax deductions in Luxembourg: the checklist by profile
Skimming?
We've prepared the shortcut for you.
This is for you if
- You are a resident employee preparing your tax return (Form 100) or your annual adjustment (the simple tax adjustment for tax withheld from your salary, Form 163) for your 2025 income.
- You are a cross-border worker living in France, Belgium, or Germany and treated as a tax resident (Article 157ter of the Income Tax Law, known as LIR, or the 50% rule under the Belgian tax treaty): these deductions are claimed through your tax return.
Not for you if you are a non-assimilated cross-border worker: according to the ACD, special expenses (deductible private expenses: insurance, savings, etc.) beyond the lump sum are only taken into account with tax assimilation. However, your deduction for travel costs still applies.
Key figures to remember
Annual caps published by the ACD, applicable to 2025 and 2026 income unless stated otherwise.
| Deduction | Cap | Year | Document needed |
|---|---|---|---|
| Automatic lump-sum special expenses allowance | €480 (€960 for a jointly taxed two-earner couple) | 2025 and 2026 | None |
| Life, death, accident, disability, health, third-party liability insurance + consumer credit interest | €672 per household member | 2025 and 2026 | Annual certificate from insurer, bank interest statement |
| Home savings scheme (approved building society) | €1,344 per person if the youngest adult subscriber is aged 18 to 40 complete as of January 1st, otherwise €672 | 2025 and 2026 | Annual home savings scheme statement |
| Private pension provision (Article 111bis LIR) | €3,200 per taxpayer | 2025 income | Annual certificate from insurer or bank |
| Private pension provision (Article 111bis LIR) | €4,500 per taxpayer | From 2026 income | Annual certificate from insurer or bank |
| Personal contributions to employer occupational pension scheme | €1,200 | 2025 and 2026 | Payslip or employer certificate |
| Childcare costs for children under 14, registered domestic help | €5,400 per year, maximum €450 per month | 2025 and 2026 | Invoices from crèche, maison relais, or childminder |
| Donations to recognized organizations | Total of at least €120, deduction capped at 20% of total net income | 2025 and 2026 | Receipts from organizations |
| Alimony / spousal support to ex-spouse | €24,000 per ex-spouse | 2025 and 2026 | Divorce decree or agreement, proof of payment |
| Dependent child not living in your household | €5,424 per child | Since 2025 income | Proof of maintenance or study payments |
| Mortgage interest on primary residence | Fully deductible in the year the property is available to you and the following year, then €4,000, €3,000, €2,000 (see below) | Since 2024 income | Annual bank interest certificate |
| Single premium credit life insurance | Increase in cap up to €6,000, plus €1,200 per child, increased by 8% per year of age over 30 at sign-up | 2025 and 2026 | Contract and premium receipt |
| Employment expenses (professional expenses, excluding travel) | Automatic €540 lump sum, actual expenses if higher | 2025 and 2026 | Professional expense invoices |
Your checklist, profile by profile
First year in Luxembourg
- Arrived during the year? The limits are reduced, but not all in the same way. Insurance, home savings, and the €480 lump sum: prorated based on full months you were taxable in Luxembourg. Private pension provision: the cap decreases for each full month you were not taxable, so arriving mid-month can produce a different result (Articles 109, 111, 111bis, and 113 LIR).
- Your overpaid tax withholding can be recovered: check whether you need a tax return or annual adjustment.
You are between 18 and 40 years old
- Home savings: €1,344 instead of €672 per household member if you are the youngest adult contract holder, up to and including the year you turn 41. Details in the guide on home savings.
- Private pension provision: same cap at any age, for a contract taken out before age 65, with a minimum duration of 10 years, and where the capital is paid out to you between age 60 and 75. See the guide on 111bis private pension provision.
You live as a couple
- Married and jointly taxed: insurance, home savings, and mortgage interest caps also apply to your spouse; the private pension provision cap applies to each spouse who has their own contract.
- Civil partners (PACS): the increase for your partner only applies if you and your partner jointly request joint taxation on the tax return. See joint or individual taxation.
- Two jointly taxed employees: the special expenses lump sum increases to €960.
You have children
- +€672 insurance cap and +€672 or +€1,344 home savings cap per child that entitles you to a child tax reduction.
- Child not living with you whom you mainly support: up to €5,424 per child.
You are buying or own a home
- Before the property is at your disposal: interest is fully deductible, plus credit arrangement fees (bank processing fees, loan notary deed, mortgage registration).
- Afterwards, starting from 2024 income: interest is fully deductible in the year the rental value is fixed (the home is available to you) and the following year; then €4,000 from the 2nd to 5th following years, €3,000 for the next five years, €2,000 thereafter. Each cap is increased by the same amount for your jointly taxed spouse or partner and for each child.
How to claim your deductions
Gather your supporting documents
One document per checked box (see table). Full list: documents to prepare your tax return.
During the year: add them to your tax card
If you are a resident, request this using Form 164 R: your tax card (the ACD document indicating your tax class to your employer) will be updated and your monthly withholding tax drops immediately.
After the year: annual adjustment or tax return
Annual adjustment (Form 163 R) if you do not need to file a tax return, otherwise tax return (Form 100), on paper or on MyGuichet.lu. Assimilated cross-border worker: Form 100.
Respect the deadline
For your 2025 income, the deadline is December 31, 2026 (Guichet.lu).
A numerical example
Let's take Léa, aged 28 as of January 1, 2025, single with no children, resident since September 2024: 2025 is a full year, so no pro-rata. Her 2025 taxable income is around €60,000, in the 39% bracket of the scale applicable since 2025 (ACD).
What she paid in 2025:
- €420 for car third-party liability insurance, €80 for personal liability insurance, and €600 into a life insurance policy taken out for at least 10 years: €1,100 total, subject to the €672 cap;
- €1,200 into a home savings contract with an approved building society: under her cap of €1,344, so €1,200 allowed.
The calculation:
- allowed special expenses: 672 + 1,200 = €1,872
- minus the €480 lump sum she already received automatically: 1,872 - 480 = €1,392 in additional deductions
- tax savings: 1,392 x 39% = €542.88
- including the contribution to the employment fund (7%): 542.88 x 1.07 = about €581 per year
If Léa had also paid €3,200 into a private pension provision contract in 2025, she would have deducted an additional €3,200: 3,200 x 39% x 1.07 = about €1,335 in tax savings. To find your own rate, check the tax scale and marginal rate.
Common mistakes
- Confusing a deduction with a refund: €1,000 deducted is worth about €1,000 x your marginal tax rate, not €1,000.
- Forgetting the €480 lump sum: as long as your insurance, home savings, private pension provision, and personal loan interest do not reach this amount, declaring them changes nothing (donations, on the other hand, are added on top).
- Declaring fire, theft, or comprehensive car insurance: the ACD excludes them.
- Counting a bank savings account labeled 'PEL' as a home savings scheme: only approved building societies qualify for the deduction.
- Applying the €4,500 private pension provision cap to your 2025 income: for 2025, the cap is €3,200.
Frequently asked questions
No. Insurance and home savings caps, like the €480 lump sum, are reduced proportionally to the full months you were taxable in Luxembourg. The private pension provision cap decreases for each full month you were not taxable: if you arrived mid-month, the result may differ. This is a question we often receive at trigger from newcomers.
Only if you and your partner jointly request joint taxation in your tax return (Form 100), which requires a partnership and a shared residence throughout the entire year. Otherwise, each partner remains within their own caps.
During the year on your tax card (Form 164 R), after the year end in your annual adjustment (Form 163 R) or tax return (Form 100), under the special expenses section. Attach supporting documents: the ACD can always ask for additional proof.