Insights
Payroll in Luxembourg: Social Security, Tax Classes and Indexation
Insights · By Chen ChunJie · Published 8 November 2026
Luxembourg payroll is shaped by the employee’s tax class, automatic wage indexation and the large share of cross-border staff. This guide sets out the 2026 rates and an example.
Last reviewed in November 2026 against the Labour Code, the 2026 social minimum wage and index tranche, CCSS rates and Guichet.lu guidance. Rates change, so we confirm them for each engagement.
Social security in 2026
| Item | Employer | Employee |
|---|---|---|
| Pension | 8.5% | 8.5% |
| Health | 3.05% | 3.05% |
| Dependency insurance | None | 1.4% |
| Accident, occupational health and Mutualité | About 1.2% to 3.8% | None |
Pension and health are capped at five times the minimum wage, EUR 13,856.63 a month in 2026.
Income tax and the tax card
The employer withholds tax each month using the employee’s electronic tax card, which sets the tax class. The scale runs from 0% to 42%, plus a 7% or 9% surcharge for the employment fund. Individual taxation is planned from 2028.
Have a Luxembourg company and want payroll run every month? See Payroll Outsourcing in Luxembourg.
Example: EUR 5,000 a month
| Line | EUR a month |
|---|---|
| Gross salary | 5,000.00 |
| Employee pension and health (11.55%) | 577.50 |
| Dependency insurance (1.4% above the allowance) | 60.30 |
| Employer social security | about 650 to 750 |
| Total employer cost | about 5,650 to 5,750 |
Income tax depends on the tax class. Try other salaries in our Luxembourg salary calculator.
Indexation and cross-border staff
When the cost-of-living index triggers a tranche, every salary rises by 2.5% from the next month. Cross-border staff are taxed in Luxembourg on days worked there, with limited home-working days allowed under each tax treaty.
FAQ: payroll in Luxembourg
What does the employer pay?
About 13% to 15% of gross pay in social security.
What does the employee pay?
About 12.95% social security plus income tax by tax class.
What is the tax card?
The electronic withholding card that tells the employer the tax class.
How often are salaries indexed?
Whenever the index triggers a tranche, usually about once a year.
Need people working in Luxembourg?
We take on a defined service, and our Local Team employs and directs the people who deliver it, with payroll, social security and the paperwork handled.
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How we get work done in Luxembourg.
Contracts, leave, notice and more.