Malta Budget 2026: New Family Tax Savings & Key Changes
Malta's 2026 Budget introduces the biggest tax changes for families in years. New tax brackets for parents and married couples with children can save up to €1,625 per parent. Here's everything you need to know.
1. Budget 2026 Overview
Malta's 2026 Budget, presented by Finance Minister Clyde Caruana, focuses heavily on supporting families with children through the tax system. Against the backdrop of Malta's declining birth rate, the government has introduced new income tax brackets specifically designed for parents and married couples with children.
The Maltese economy continues its strong performance with real GDP growth expected at 4.1%, and the budget deficit is projected to decrease to 2.8% in 2026, which should lead Malta to exit the EU's Excessive Deficit Procedure.
Max tax savings per parent (2026)
Pension income tax exempt
Inheritance duty threshold
2. New Family Tax Brackets
The most significant change in the 2026 Budget is the introduction of new income tax brackets for families. These apply to married couples and parents with qualifying children (under 18, or under 23 if in full-time education). The new rates provide wider 0% and 15% bands, meaning more of your income is taxed at lower rates.
Married Taxpayers - One Child
| Income Range | Rate | Subtract |
|---|---|---|
| €0 - €17,500 | 0% | €0 |
| €17,501 - €26,500 | 15% | €2,625 |
| €26,501 - €60,000 | 25% | €5,275 |
| €60,001+ | 35% | €11,275 |
Married Taxpayers - Two or More Children
| Income Range | Rate | Subtract |
|---|---|---|
| €0 - €22,500 | 0% | €0 |
| €22,501 - €32,000 | 15% | €3,375 |
| €32,001 - €60,000 | 25% | €6,575 |
| €60,001+ | 35% | €12,575 |
Parent Taxpayers - One Child
| Income Range | Rate | Subtract |
|---|---|---|
| €0 - €14,500 | 0% | €0 |
| €14,501 - €21,000 | 15% | €2,175 |
| €21,001 - €60,000 | 25% | €4,275 |
| €60,001+ | 35% | €10,270 |
Parent Taxpayers - Two or More Children
| Income Range | Rate | Subtract |
|---|---|---|
| €0 - €18,500 | 0% | €0 |
| €18,501 - €25,500 | 15% | €2,775 |
| €25,501 - €60,000 | 25% | €5,325 |
| €60,001+ | 35% | €11,325 |
Tax brackets for single taxpayers without children remain unchanged in 2026. See our complete tax rates guide for all brackets.
3. How Much Can You Save?
The new family tax brackets are being phased in over three years (2026-2028). The maximum tax savings per parent with two or more children are:
per parent/year
per parent/year
per parent/year
Calculation Example
Example: Married couple, 2 children, €45,000 gross salary each
Previous Married Rate (No Children)
Tax: €45,000 × 25% - €3,650 = €7,600
New Rate (2+ Children)
Tax: €45,000 × 25% - €6,575 = €4,675
Saving per parent: €2,925/year (capped at €1,625 in 2026)
Combined household saving: up to €3,250/year in 2026
Our Malta Salary Calculator has been updated with all the new 2026 tax brackets. Enter your salary and select your family status to see exact savings.
4. Who Qualifies for the New Rates?
Not all married taxpayers or parents benefit from the new rates. You must meet specific criteria:
Qualifying Child Definition
- Under 18 years of age, OR
- Under 23 years of age and in full-time education
Married Rates Requirements
- Couple is married and Malta-resident
- At least one spouse holds Maltese, EU, or EEA nationality, OR
- Both are long-term residents with children born and residing in Malta
Parent Rates Requirements
- Individual is Malta-resident
- Taxpayer is Maltese, EU/EEA national, or long-term resident with children born in Malta
- Non-parent guardians must be married or have registered cohabitation with the child's parent
The Malta Tax and Customs Administration has updated the FS4 Payee Status Declaration Form. Employees should submit a new FS4 to their employer to benefit from the new rates. Employers must update payroll systems accordingly.
5. Pension Tax Exemption
From 2026, Malta has introduced a full tax exemption on pension income. This is a major improvement over previous years where only partial exemptions existed.
What's Changed?
- Pension income up to double the maximum statutory pension (including bonuses) is fully exempt
- Applies to all pensioners from 1 January 2026
- Significant savings for retirees who previously paid tax on pension income
This change makes Malta even more attractive as a retirement destination. Read our Malta Pension System Guide for more details about the pension system.
6. Property & Inheritance Changes
The 2026 Budget includes significant changes to property-related taxation:
Inheritance Stamp Duty
The reduced duty rate of 3.5% on inherited property has been extended from the first €200,000 to the first €400,000. This effectively doubles the tax relief for people inheriting family property.
Inheritance Tax Savings Example
Property value: €350,000
Previous: €200,000 × 3.5% + €150,000 × 5% = €7,000 + €7,500 = €14,500
New: €350,000 × 3.5% = €12,250
Saving: €2,250
First-Time Buyers Scheme
The First-Time Buyers scheme has been enshrined in law permanently. The rules have also been amended so that ownership of non-residential property will no longer disqualify eligibility for the scheme.
Use our Stamp Duty Calculator to calculate your exact property transfer costs.
7. Business & Investment Incentives
The Budget introduces several measures to support business growth and investment:
Micro Invest Scheme
- Malta: up to €65,000 tax credit
- Gozo: up to €85,000 tax credit
- Increased from previous limits
R&D Deduction
- 175% tax deduction on R&D expenditure
- Eligible research and innovation costs
- Encourages technology investment
New Investment Tax Credit
A new investment tax credit has been introduced offering 60% of qualifying capital expenditure, claimable over four years. This benefits businesses making significant investments in growth.
Technology & AI Incentives
Tax deductions on investments related to Artificial Intelligence, digitalisation, modernisation, automation, and cybersecurity will be accelerated over a span of two years instead of the standard depreciation period.
Self-employed individuals should also check our Self-Employment Tax Guide for tax planning tips.
8. COLA 2026
The Cost of Living Adjustment (COLA) for 2026 is €4.66 per week, reflecting lower inflation compared to previous years. This brings the cumulative COLA to €10.36 per week (€538.72 annually).
| Year | Weekly COLA | Annual Equivalent |
|---|---|---|
| 2024 | €12.81 | €666.12 |
| 2025 | €5.24 | €272.48 |
| 2026 | €4.66 | €242.32 |
COLA is automatically added to all salaries and is not subject to income tax. Read more in our COLA Guide.
9. Frequently Asked Questions
How much can families save with the new Malta 2026 tax brackets?
Families with two or more children can save up to €1,625 per parent in 2026. These savings increase to €3,250 in 2027 and €5,000 in 2028 as the new brackets are phased in over three years.
Who qualifies for the new family tax rates?
To qualify, you must be Malta-resident and married or a parent with qualifying children under 18 (or under 23 if in full-time education). At least one spouse must hold Maltese, EU/EEA nationality, or both must be long-term residents with children born in Malta.
Is pension income tax-free in Malta from 2026?
Yes, from 2026 all pension income up to double the maximum statutory pension amount (including bonuses) is fully exempt from income tax.
What changed for property inheritance tax?
The reduced stamp duty rate of 3.5% on inherited property has been extended from the first €200,000 to the first €400,000, effectively doubling the tax relief on inherited properties.
What is the COLA increase for 2026?
The COLA for 2026 is €4.66 per week (€242.32 annually), reflecting lower inflation compared to previous years.
Calculate Your 2026 Net Salary
Our salary calculator is updated with all 2026 Budget changes. See exactly how the new family tax brackets affect your take-home pay.
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Share this article
The tax band changes are great news for families. We have 2 kids and looks like we'll save around €400 this year compared to last year. Every bit helps with the cost of living going up!
same here Chris! family of 4 and the new brackets definitely help. did you also check the in-work benefit changes?
as a single parent this is really helpful to see whats changed. the children allowance increase is welcome but honestly still not enough with rent prices in malta these days 😅
Very comprehensive breakdown. I work in HR and will be sharing this with our employees. The salary calculator on this site is also fantastic btw
Been living here 2 years now and this site is honestly my go-to for anything tax related in Malta. Keep up the good work! 🇲🇹
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