Great news for all workers and retirees in Luxembourg: The Chamber of Deputies formally approved the promised tax cuts for 2024.

As of 1 January, Luxembourg workers and retirees will see an average tax cut of 10%.

First developed by the Bettel government during the tripartite meeting in spring, this adaptation of the scale was improved by the new Frieden government on Wednesday.

On top of the previously determined 2.5 adjustments by the last government and now 1.5 wage indexations, the four wage indexations in total will alleviate the strain on residents' incomes and, in part, offset the loss of purchasing power caused by the unaddressed "bracket creep" in the tax scale. The package is expected to cost the government €480 million.

How much will you earn in 2024?

As per the law, the initial threshold for taxation is set to rise to €12,438 from its current €11,265. The adjusted basic rate structure would entail an 8% tax on income ranging from €12,438 to €14,508 per year, followed by a 9% tax on the subsequent tranche up to €16,578, and so forth. The 39% rate would be applicable to income between €50,751 and €110,403, while the top tax rate of 42% is slated to apply from 1 January at €220,788, up from the current €200,004.

The Ministry of Finance presented various concrete examples, including a family with one or two children, a single parent, a single person or retired couple.

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For instance, a family with two children earning €75,000 gross per year would see a €784 boost in net income - that's roughly €66 per month.

A single parent earning €50,000 with one child would see a boost of €1,160 - nearly €100 more per month.

The relief for a single person with a gross annual salary of €50,000 would amount to €876 (€73 per month) while a bachelor earning €75,000 annually would gain a comparatively lower €1,095 (€37 per month).

See various examples provided by the Ministry (in French)

A retired couple with €95,000 gross per year will have €1,940 more per year, or €160 per month.

As of 1 January 2017, there have been eight wage indexations, with the last adjustment to the tax table occurring during the 2017/18 tax reform.