Luxembourg Tax Breaks: New Incentives for Young Professionals

Luxembourg is making strides to support young professionals by introducing two tax-friendly benefits: a rental allowance and a young professional bonus. These measures aim to ease financial burdens for early-career employees and make Luxembourg a more attractive place to work.

Rental Allowance: A Helping Hand for Young Renters

Starting June 2024, eligible employees can receive a rental bonus from their employer, which is 25% tax exempt under Luxembourg tax regulations. To qualify, employees must:

• Be under 30 years old at the start of the year.

• Rent a property as their main residence in Luxembourg.

• Have an annual salary that does not exceed €92,553 in 2024 (€94,960 in 2025).

The maximum rental bonus is either €1,000 per month or the actual rent paid (excluding utilities), whichever is lower.

Young Professional Bonus: A Boost for Career Starters

From January 2025, young employees signing their first permanent employment contract in Luxembourg can receive a Luxembourg tax friendly bonus from their employer. This bonus is 75% tax exempt and varies based on salary:

• €5,000 for salaries ≤ €50,000

• €3,750 for salaries between €50,001 – €75,000

• €2,500 for salaries between €75,001 – €100,000

This benefit is designed to help young professionals increase their net earnings and establish themselves financially. However, those earning over €100,000 per year will not qualify.

Luxembourg Tax Benefits : A Competitive Edge for Young Talent

With these initiatives, Luxembourg is strengthening its appeal to young professionals by offering financial incentives that ease the cost of living and boost disposable income. Whether renting a home or starting a new career, these tax exempt bonuses provide real financial relief for young employees. These measures position Luxembourg tax policies as some of the most attractive for young employees in Europe.