The Malta Budget 2026, as highlighted by Deloitte, outlines measures focused on economic growth, fiscal stability, social benefits, business support, and green initiatives.
1) Economic & Fiscal Overview
- Real GDP growth is expected to reach 4.1% by the end of 2025.
- The budget deficit is projected to continue its reduction to 3.3% in 2025 and 2.8% in 2026, aiming for an exit from the Excessive Deficit Procedure.
- The Debt to GDP ratio is anticipated to stabilize in the 46% to 47% range in the short to medium term.
- Cost-of-Living Adjustment (COLA) for 2026 is expected to be €4.66 per week.
2) Social Benefits and Personal Tax
- Significant changes to progressive income tax rates for parents are being staggered over three years to address Malta's declining birth rate. These changes apply until the child is 18 (or 23 if in formal education).
- Retirement pensions will see a €10 weekly increase.
- The children's allowance is set to increase by €250 per child for families earning less than €30,000 annually.
- Social security contributions paid before the age of 18 will now count towards pension entitlement.
- Student stipends are scheduled to increase by 15% next year.
3) Business, Innovation, and Industry Support
- A 175% tax deduction will be granted on eligible research and innovation expenditure.
- Tax deductions on investments in AI, digitalization, automation, and cybersecurity will be accelerated over two years.
- The maximum benefit under the Micro Invest Scheme is increasing to €65,000 in Malta and €80,000 in Gozo.
- Local enterprises will receive a 60% tax credit on qualifying investments over a four-year period.
- The government is committing €100 million in investment for digitalization and the adoption of technologies like AI, IoT, and cybersecurity.
4) Property Measures
- The First-Time Buyer Scheme will be permanently enshrined in law. Eligibility rules are being amended so that ownership of non-residential property will not disqualify applicants.
- The reduced duty rate of 3.5% on inherited residential property will now apply on the first €400,000 (up from €200,000).
5) Green Initiatives
- A new scheme offers young people under 30 a €5,000 annual grant for five years if they give up their driving license.
- New grants of €1,500 per year are introduced for those buying motorcycles or switching from cars to motorcycles.
- Investments of €85 million are planned for a new organic waste processing plant.
- Existing grants for electric cars and scrappage schemes will be maintained.
6) Detailed Personal Tax Measures for Families (Malta Budget 2026)
The Malta Budget 2026 introduced significant progressive income tax rate changes for parents, aiming to address the declining birth rate. These changes are staggered over a three-year period (2026, 2027, and 2028) and apply until a child turns 18 years old, or 23 years old if still attending formal education. The new rates distinguish between parents based on the number of children (one child vs. two or more) and the computation method used (Married vs. Parent computation).
Families with One Child
The following tables show the income tax brackets, rates, and "Less" (tax reduction) amounts for taxpayers with one child:
Married Computation with One Child
|
Income Bracket |
Tax Rate (2026) |
Less (2026) |
Income Bracket |
Tax Rate (2027) |
Less (2027) |
Income Bracket |
Tax Rate (2028) |
Less (2028) |
|
€0 - €17,500 |
0% |
€0 |
€0 - €20,000 |
0% |
€0 |
€0 - €22,500 |
0% |
€0 |
|
€17,501 - €26,500 |
15% |
€2,625 |
€20,001 - €30,000 |
15% |
€3,000 |
€22,501 - €33,500 |
15% |
€3,375 |
|
€26,501 - €60,000 |
25% |
€5,275 |
€30,001 - €60,000 |
25% |
€6,000 |
€33,501 - €60,000 |
25% |
€6,725 |
|
€60,001+ |
35% |
€11,275 |
€60,001+ |
35% |
€12,000 |
€60,001+ |
35% |
€12,725 |
Parent Computation with One Child
|
Income Bracket |
Tax Rate (2026) |
Less (2026) |
Income Bracket |
Tax Rate (2027) |
Less (2027) |
Income Bracket |
Tax Rate (2028) |
Less (2028) |
|
€0 - €14,500 |
0% |
€0 |
€0 - €16,000 |
0% |
€0 |
€0 - €18,000 |
0% |
€0 |
|
€14,501 - €21,000 |
15% |
€2,175 |
€16,001 - €24,500 |
15% |
€2,400 |
€18,001 - €28,000 |
15% |
€2,700 |
|
€21,001 - €60,000 |
25% |
€4,275 |
€24,501 - €60,000 |
25% |
€4,850 |
€28,001 - €60,000 |
25% |
€5,500 |
|
€60,001+ |
35% |
€10,270 |
€60,001+ |
35% |
€10,850 |
€60,001+ |
35% |
€11,500 |
Families with Two Children or More
The following tables show the income tax brackets, rates, and "Less" (tax reduction) amounts for taxpayers with two children or more:
Married Computation with Two Children or More
|
Income Bracket |
Tax Rate (2026) |
Less (2026) |
Income Bracket |
Tax Rate (2027) |
Less (2027) |
Income Bracket |
Tax Rate (2028) |
Less (2028) |
|
€0 - €22,500 |
0% |
€0 |
€0 - €30,000 |
0% |
€0 |
€0 - €37,000 |
0% |
€0 |
|
€22,501 - €32,000 |
15% |
€3,375 |
€30,001 - €41,000 |
15% |
€4,500 |
€37,001 - €50,000 |
15% |
€5,550 |
|
€32,001 - €60,000 |
25% |
€6,575 |
€41,001 - €60,000 |
25% |
€8,600 |
€50,001 - €60,000 |
25% |
€10,550 |
|
€60,001+ |
35% |
€12,575 |
€60,001+ |
35% |
€14,600 |
€60,001+ |
35% |
€16,550 |
Parent Computation with Two Children or More
|
Income Bracket |
Tax Rate (2026) |
Less (2026) |
Income Bracket |
Tax Rate (2027) |
Less (2027) |
Income Bracket |
Tax Rate (2028) |
Less (2028) |
|
€0 - €18,500 |
0% |
€0 |
€0 - €24,000 |
0% |
€0 |
€0 - €30,000 |
0% |
€0 |
|
€18,501 - €25,500 |
15% |
€2,775 |
€24,001 - €33,500 |
15% |
€3,600 |
€30,001 - €42,000 |
15% |
€4,500 |
|
€25,501 - €60,000 |
25% |
€5,325 |
€33,501 - €60,000 |
25% |
€6,950 |
€42,001 - €60,000 |
25% |
€8,700 |
|
€60,001+ |
35% |
€11,325 |
€60,001+ |
35% |
€12,950 |
€60,001+ |
35% |
€14,700 |