The 2026 budget focuses on strengthening its financial centre through tax reforms and tech investments, while expanding incentives and support measures for SMEs and start-ups to boost innovation and entrepreneurship.

Luxembourg’s Minister of Finance, Gilles Roth, submitted the 2026 state budget to the Chamber of Deputies on 8 October 2025, proposing a series of fiscal measures aimed at bolstering competitiveness, supporting households, and fostering innovation. The draft budget seeks to balance social support with economic growth by strengthening Luxembourg’s position as a leading financial centre, promoting entrepreneurship, and introducing targeted tax relief for families and workers.

Strengthening Luxembourg’s financial hub  

The 2026 budget aims to position Luxembourg as a financial centre with key tax reforms and innovation-driven investments. Starting in 2025, actively managed ETFs (exchange-traded funds) will be exempt from subscription tax. The corporate income tax (IRC) will be reduced by one percentage point. The government is also taking steps to make the carried interest tax regime attractive.

Additionally, the government is focusing on technology with initiatives like the FundTechAccelerator, the AI Experience Centre, and the Intergenerational Sovereign Fund’s commitment to allocate 15% of its portfolio to alternative assets, including 1% in cryptocurrencies.

Boosting support for SMEs and start-ups  

The government is expanding its support for SMEs and start-ups with an improved participatory bonus scheme, a more attractive expatriate programme, and incentives for “Jobstarters.”

A start-up action plan, featuring a tax credit currently under parliamentary review and a stock option scheme, aims to encourage entrepreneurship.

Flat income tax rate for seasonal workers in agriculture

Seasonal workers in agriculture will benefit from improved conditions, including a flat 3% income tax over 30 days and an EUR 18 hourly wage.

Full income tax exemption for single-parent households

The budget includes a full income tax exemption for single-parent households with annual earnings up to EUR 52,400. Additionally, it introduces a family allowance-sharing measure, granting a yearly tax credit of EUR 922 per child to the parent who does not qualify for tax class 1a benefits.