New in 2025

Several new legal and regulatory provisions directly affecting citizens will come into force in 2026. Below is an overview of the main changes that will have a direct impact on citizens. Please note that this list is not exhaustive.

Housing/Spatial Planning

Individual housing benefits

Effective date: 1 January 2026

In order to simplify procedures for accessing individual housing benefits for all households, the amended law on individual housing benefits has been revised. The adopted amendments aim to remove ambiguities, harmonise procedures and strengthen legal certainty for beneficiaries. Key improvements include:

• Clarification of assistance for financing the rental guarantee. Where the end date of a lease is not confirmed in writing, it will now be deemed to correspond to the tenant's actual departure date.
• A fairer calculation of net income, taking into account all sources of income, including income not taxable in Luxembourg, as well as the portion of family allowances exceeding the statutory amounts, in order to ensure equal treatment for all applicants.
• Reduced administrative obligations, with employment-related changes no longer required to be declared immediately, but only at the next review of the file, while maintaining the obligation to promptly report changes in household composition.
• Environmental compliance, with the discontinuation of the home improvement subsidy for the installation of fossil fuel boilers, in line with European requirements.
• Clarification of the integrated housing subsidy, now limited to one subsidy per single-family house and subject to the existence of a separate access.
• A more transparent rent subsidy scheme. In cases where rent subsidies have been unduly received, beneficiaries will now have one year to begin repaying the amount claimed.

These changes enhance the clarity and reliability of the scheme, ensuring simplified and equitable access to individual housing benefits.

Registration for access to affordable housing via MyGuichet

Effective date: 1 January 2026

The National Register of Affordable Housing (RENLA, registre national des logements abordables) will be introduced and will become the single access point for anyone wishing to apply for affordable housing.

Registration will be available via MyGuichet. Applicants will only need to register once in order to be considered for affordable housing. RENLA will thus replace the previous multiple application procedures and provide a centralised framework to support households more effectively in their search for affordable housing.

Finance

Taxation of parents

Effective date: 1 January 2026

A tax credit of up to EUR 922.50 per child will be granted, upon application, to the parent whose child is not part of their household due to alternating residence arrangements and who, in the event of a shared family allowance, does not benefit from tax class 1a. This measure applies exclusively to the years 2025 and 2026.

Extended working life and retirement provision

Effective date: 1 January 2026

Extended working life tax allowance

A new tax allowance for extended working life will be introduced for individuals who meet the conditions for entitlement to an early old-age pension and who voluntarily continue their professional activity until the age of 65. This measure allows for a reduction in taxable income of up to EUR 9,000 per year. Eligibility is subject to certification of entitlement to a pension, to be requested from the competent Luxembourg pension institutions.

Increase in the tax deductibility ceiling for private pension schemes

The tax deduction ceiling for private pension schemes will increase from EUR 3,200 to EUR 4,500 per year. This measure aims to strengthen the third pillar of the pension system based on individual initiative.

Environment

Effective date: 1 January 2026

Depreciation rules applicable to investment expenditure for sustainable energy renovations

The tax depreciation rate applicable to sustainable energy renovations of rental housing will increase from 6% to 10%. This measure aims to encourage investment in sustainable housing in the context of climate change.

CO2 tax

The carbon price will reach EUR 45 per tonne of CO₂, in line with the National Energy and Climate Plan. This increase will result in a higher CO₂ tax on the energy products concerned.

In order to mitigate the potential impact of the CO2 tax on people with low or medium incomes, the CO2 tax credit will be increased by EUR 24, bringing the total amount to EUR 216.

Tobacco excise duties

Effective date: 1 January 2026

An increase in excise duties on cigarettes and fine-cut rolling tobacco will enter into force in Luxembourg. All else being equal, this will result in an increase of EUR 0.30 per pack of 20 cigarettes and EUR 0.40 per 50 g pack of rolling tobacco.

Economy and Financial Centre

Effective date: 1 January 2026

Support for investment in start-ups

A tax credit will be introduced for individuals who invest in start-ups, with the aim of improving access to financing for Luxembourg start-ups during their early years.

To be eligible, start-ups must meet specific criteria relating to innovation, size and age. Investors must also comply with minimum conditions, including the amount invested and the holding period.

The tax credit amounts to 20% of the investment, up to a maximum of EUR 100,000 per year, and aims to mobilise private savings in support of innovative SMEs.

Taxation of seasonal, casual and trainee workers

Employers who, for occasional work, are required to hire temporary staff may, under certain conditions, apply a flat-rate withholding tax on wages.

From 1 January 2026, the maximum hourly wage threshold to benefit from this scheme will increase from EUR 16 to EUR 18.

Similarly, the maximum continuous working period will increase from 18 to 30 consecutive days for workers in the agricultural, viticultural or forestry sectors, in order to cover the full duration of activities such as the grape harvest.

Defence Bond

Luxembourg will introduce a sovereign bond dedicated to defence, known as the Defence Bond, to finance its growing military commitments. This mechanism will allow private investors to support national defence expenditure. Interest earned by individuals on these bonds will be exempt from tax. The framework provides for transparent use of funds, exclusively for eligible defence projects.

Family

Effective date: 1 January 2026

Supplement for older persons (COMPA, Complément pour personnes âgées)

From 1 January 2026, the Law of 18 July 2025 authorising the National Solidarity Fund to contribute to the cost of services and care provided in residential facilities for older persons and in approved assisted living accommodation will enter into force, replacing the former Law of 30 April 2004 on geriatric care.

The law introduces a new calculation system designed to reflect actual market prices for rooms and assisted living accommodation covered by its scope. The flat-rate coverage of essential services, combined with an increase in the monthly exempt amount applied to personal resources, will enable beneficiaries to lead a more dignified life.

Financial assistance for older persons (AFPA, Aide financière pour personnes âgées)

The Government in Council regulation of 14 November 2025 on the granting of a cost-of-living allowance for the year 2026 provides, for the first time, for the payment of financial assistance to persons receiving an old-age or survivor's pension, or aged 65 and over. This measure aims to combat poverty among older persons and may amount to up to EUR 2,400 per year, depending on household composition and income.

Education/ Youth

New curriculum for primary education

Entry into force: from 15 September 2026

A new curriculum will be introduced gradually in primary education from 15 September 2026, starting with Cycle 1. The curriculum sets out the core competencies to be achieved by pupils at the end of each learning cycle, as well as the annual number of lessons to be allocated across all areas of development and learning.

Extension of compulsory schooling from 16 to 18 years

Entry into force: 15 September 2026

Adopted in 2023, the law extending compulsory schooling from 16 to 18 years will take effect at the start of the 2026/2027 school year. It will apply to pupils who have not yet reached the age of 17 before 1 September 2026. This extension allows pupils at risk of dropping out of school to benefit from a longer period of schooling and to increase their chances of success.

Reform of music theory (solfège)

Entry into force: 15 September 2026

The musical training strand (solfège) will be reformed for the 2026/2027 school year. The reform will align content and teaching approaches with current musical practices and the actual needs of pupils.

ALPHA - zesumme wuessen: choice of literacy language

Entry into force: 15 September 2026

In the second term of the 2026/2027 school year, parents of pupils in Cycle 1.2 will, for the first time, be able to choose German or French as their child's language of literacy. At the start of the 2027/2028 school year, pupils in Cycle 2.1 will be taught literacy in the chosen language. The ALPHA - zesumme wuessen reform will then be gradually extended to all cycles up to the 2032/2033 school year.

Health/ Social Security

Pension adjustment

Effective date: 1 January 2026

In line with Article 225bis of the Social Security Code, pensions will be adjusted as of 1 January 2026. A 1.5% increase will be applied to reflect changes in the average salary level subject to contributions.

Adjustments to the pension scheme

Entry into force: gradually from 1 January 2026

Adjustments to Luxembourg's pension scheme will be introduced gradually from 1 January 2026. They aim to ensure the financial sustainability of the system while maintaining the statutory retirement age at 65. The main adjustments concern an increase in contribution rates, the introduction of a gradual pension, greater flexibility in the recognition of years of study, a gradual increase in the contribution period required for early old-age pensions, and the continued employment allowance (AMVP).

Amendment of the Hospital Act

The bill relating to amendments to the Hospital Act was adopted by the Chamber of Deputies on 18 December 2025.

These changes are intended, among other things, to promote the development of out-of-hospital care. The text provides for the possibility of creating additional outpatient sites and authorising satellite service units where minor procedures may be carried out outside the hospital setting, in particular in dermatology or ophthalmology, such as cataract surgery.

The bill also allows, except in exceptional circumstances, beds from the health reserve to be integrated into hospital capacity. This measure aims to strengthen the provision of acute and medium-stay care. Finally, the text provides for an update of the maximum number of hospital beds in order to better reflect actual developments in activity and needs on the ground.

Creation of the public establishment "Centrale nationale d''achat et de logistique (CNAL)"

Entry into force: 1 February 2026

This law establishes a National Central Purchasing and Logistics Agency (Centrale nationale d'achat et de logistique) whose purpose is to meet the organisational and logistical needs of the main stakeholders in the hospital and para-hospital sector, in particular health sector establishments, the Grand-Ducal Fire and Rescue Corps, the Luxembourg Institute of Health, the National Health Laboratory, as well as other contracting authorities and organisations active in the social, family and therapeutic fields. The objective is to save time and relieve healthcare and pharmaceutical staff of part of their logistical tasks, while achieving budgetary savings, optimising storage space and improving productivity.

Tobacco: amendments to legislation on nicotine pouches and new nicotine-containing products

Effective date: 1 January 2026

The amendments introduced by this law relate in particular to nicotine pouches and new nicotine-containing products, which must now comply with the same obligations and restrictions as tobacco products, such as the ban on advertising, the prohibition of free distribution of such products, and the obligation to display health warnings.

Their nicotine content is limited to 0.048 mg per pouch or per gram of product, certain additives are prohibited, and the products must be fitted with child safety devices. Their consumption is prohibited in schools, playgrounds and premises accommodating minors under the age of 16.

In addition, sellers may require the presentation of an identity document for the purpose of verifying customers' age for all products covered by anti-tobacco legislation. The packaging of cigarettes and tobacco has been regulated.

Launch of the pilot project for "physical activity prescription (PAP)"

Start: first quarter of 2026

The pilot phase of the preventive medicine programme for physical activity prescription will allow participating doctors to refer eligible patients to specialised facilities providing therapeutic physical activity. The aim is to offer inactive or insufficiently active patients structured support based on physical activity adapted to the conditions covered by the programme, in particular cancer, type 2 diabetes and cardiovascular diseases. Through PAP, eligible patients are thus able to increase their level of physical activity in a supervised manner, reduce their symptoms and improve their chances of recovery. The pilot phase is scheduled to last one year from the launch of the project.

More information

Regulation of companies formed by doctors, dentists, psychotherapists or veterinarians

At its meeting of 17 December 2025, the Government Council adopted the preliminary draft bill providing for the creation of companies by doctors, dentists, psychotherapists or veterinarians, as well as the related amendments to the amended law of 8 June 1999 on the Medical Council and the amended law of 31 May 2002 on the Veterinary Council.

The bill will now be introduced into the legislative procedure. It forms part of the implementation of the 2023-2028 coalition agreement, which provides for the creation of a legal framework allowing doctors to practise within companies composed exclusively of doctors, dentists, psychotherapists or veterinarians.

More information

Alignment of the early old-age pension scheme

Following a judgment of 1 March 2024, the Constitutional Court found an inequality of treatment between two categories of beneficiaries of an early old-age pension, namely employees and self-employed workers.

Bill No. 8514 aims to remedy this inequality by regularising the rules applicable to self-employed workers and introducing the same anti-cumulation provisions as those applicable to employees, thereby making the system fairer for everyone.

Bill 18 was adopted by the Chamber of Deputies on 18 December 2025.

Gender equality

Effective date: 1. Semester 2026

The National Centre for Victims of Violence (CNVV) will be open twenty-four hours a day, seven days a week.

More information

Economy/ Energy/ Companies

State Contribution to Electricity Grid Costs

Starting January 1, 2026, and for at least three years, the State will cover a significant portion of electricity grid costs. A total of €150 million will be invested for the year 2026.

The measure applies to all customers-both households and businesses-and is automatic: no application is required.

Contribution to the Compensation Mechanism

As of January 1, 2026, the development of renewable energy will no longer be funded by a contribution levied on every electricity customer. The contribution to the compensation mechanism will now be covered directly by the State budget. A total of €80 million will be invested for the year 2026.

Pre-financing of Photovoltaic Installations

The pre-financing of financial aid for photovoltaic installations allows individuals to benefit from the "Klimabonus" subsidy without having to wait for payment from the State. Starting January 2, 2026, this subsidy will be directly deducted from the final invoice by the installer. It applies to photovoltaic installations and, where applicable, in combination with a home battery.

Digitalization of Applications for National Economic Activity Zones (ECO-n) via MyGuichet

Starting in January 2026, applications for establishment in a national economic activity zone can be submitted via MyGuichet. This will not only contribute to the digitalization process but will also allow for faster processing and traceability of the application for the requesting company.

De Minimis Register

Beginning January 1, 2026, a central European register for de minimis aid will be established and made accessible online by the European Commission. Like all other Member States, Luxembourg must record information regarding de minimis aid granted to companies. This public register will enhance transparency regarding allocated amounts and, once it covers three full years, will reduce reporting obligations for companies.

Land Registry

A mapping tool covering all Economic Activity Zones (ZAE) across the national territory will be launched online in 2026. This will ensure more precise monitoring of occupied or available surfaces, land, and buildings within these zones. It will offer both companies seeking space for their projects and zone managers unified and standardized digital access to land information. It will also facilitate the collection and processing of data regarding companies established in the ZAEs.

Simplified Administrative Procedure for Business Creation

In 2026, the Ministry of the Economy, the Registration Duties, Estates and VAT Authority (AED), and the Social Security Common Center (CCSS) will group business creation procedures together. This will create an integrated and harmonized process, allowing for the application for a business permit, VAT number, and employer registration number in a single administrative step.

Implementation of a Sustainability Reporting Tool for SMEs

In 2026, a digital tool developed jointly by the Ministry of the Economy, in collaboration with the Chamber of Commerce and the Chamber of Skilled Trades and Crafts, will be launched. This tool aims to help SMEs meet sustainability reporting requirements as part of the European Commission's "Omnibus" administrative simplification measures.

Bill No. 8597: Investment Aid Scheme for Energy Renovation Works in Functional Buildings

Starting in 2026, a new aid scheme will be established to support companies and individuals in their energy renovation projects for functional (non-residential) buildings. This scheme will cover both the actual works and the preliminary studies required before investments are made. The aid scheme will remain available until the end of 2029, encouraging owners to improve the energy performance of their buildings before new requirements for non-residential buildings come into effect in 2030.

The aid rates vary based on the size of the beneficiary:30% for large enterprises, 40% for medium-sized enterprises, 50% for small enterprises, micro-enterprises, and individuals, a maximum amount fixed at EUR 300,000.

Bill No. 8475 regarding the amendment of the Law of August 9, 2018, on aid schemes for small and medium-sized enterprises

The amendments to the Law of August 9, 2018, concerning aid schemes for small and medium-sized enterprises, which are scheduled to take effect in 2026, are a key component of the 2023-2028 government program designed to support the digital and sustainable transition of the Luxembourg economy. The primary objective of this legislation is to foster a more favorable environment for entrepreneurship by making access to state aid simpler, faster, and more transparent.

To achieve this, the bill mandates enhanced digitalization of administrative steps, featuring smoother online procedures and clearly defined processing deadlines. Furthermore, new aid schemes will be introduced to specifically target investments in digitalization, the ecological transition, and initial investments for first-time business creators. Finally, the implementation of the "once only" principle-ensuring businesses only have to provide information to the administration once-combined with a "silence means agreement" mechanism, will significantly reduce administrative burdens and accelerate formal approval processes.

Bill No. 8386: Renewal of the Aid Scheme for Environmental and Climate Protection

This bill focuses on the renewal of the aid scheme for environmental and climate protection, aims to support companies investing in eco-friendly technologies or striving to improve their environmental performance. Among the most notable updates, the bill introduces a fossil fuel exclusion, meaning that energy efficiency or decarbonization measures based on fossil fuels will no longer be subsidized except under strictly defined conditions. To further drive the energy transition, new incentives have been established to provide targeted support for investments in electric and hydrogen vehicles, as well as critical energy infrastructure, specifically the development of a future hydrogen network in Luxembourg.

Additionally, the bill mandates simplified administrative procedures through the integration of the "once only" principle and offers easier access for SMEs by providing streamlined processing for aid amounts below EUR 100,000. Ultimately, the overall objective of this legislation is to accelerate the energy transition while simultaneously maintaining the global competitiveness of businesses operating in Luxembourg.