Malta Budget 2026: Main Announcements

The 2026 Malta Budget underscores the country's strong economic momentum and resilience amid global uncertainty. The GDP grew by 3.1% in the first half of 2025, the highest rate in the EU, driven by robust domestic consumption and expanding overseas services.

Economic Stability and Fiscal Outlook

Malta's economy remains a European leader, with the digital and communications sectors growing by 7.4% and 10.3%, respectively, and tourism expanding by 12.9%. The GDP growth for 2025 is projected at 4.1%, with inflation easing to 2.2%.

• Cost of Living Adjustment (COLA): €4.66 per week
• Deficit: 3.3% of GDP (expected to fall to 2.8% in 2026)
• Debt-to-GDP ratio: 47.1%, well below the EU's 60% benchmark

These results reflect Malta's balance of growth and fiscal prudence, alongside sustained social investment.

Tax Relief for Families

A major feature of Budget 2026 is a three-year personal tax reform supporting families with children under 18 (or 23 if in full-time education). New "Married" and "Parent" tax computations will gradually raise tax-free thresholds:

• One child: €17,500 in 2026 → €22,500 by 2028
• Two or more children: €22,500 in 2026 → €37,000 by 2028

Depending on household income, some families may save up to €6,000 annually by 2028, injecting about €160 million into the economy.

Enhanced Pensions and Social Measures

Pensions will rise by €10 per week, with widows' pensions increasing by an additional €3.50. Other measures include:

• Children's Allowance: up to €520 per year, extended until children reach 23 years
• Supplementary Allowance: income thresholds lifted to €20,000 (couples) and €14,000 (singles)
• Elderly annual supplement: +€100, now payable to both spouses
• Expanded support for foster care, disability, and post-secondary students (€500 grant)
• Tax exemption on pensions maintained at double the maximum pension value

Work-Life Balance and Employment

New initiatives promote a more flexible and inclusive labour market:

• Neonatal Care Leave for parents of newborns requiring intensive care
• Extended bereavement, miscarriage and parental leave (including self-employed individuals)
• National Talent Register to align skills with labour-market demand and encourage return migration

Education, Youth and Innovation

The Budget increases student stipends by 15%, introduces a €280 monthly allowance for Gozitan students studying in Malta, and offers a €500 grant for families of students in Years 10–11. Around 20,000 digital devices will be distributed under the expanded LIFEHACK programme to improve financial and digital literacy.

Business Competitiveness and Digital Transformation

To boost investment and innovation:

• 175% tax deduction for R&D expenditure
• Accelerated amortisation (two years) for AI, digitalisation and automation investments
• Up to 60% investment tax credit for qualifying capital expenditure
• Micro Invest Scheme extended (aid ceilings: €65,000 Malta / €85,000 Gozo)
• Wage-support mechanism: Government to fund 65% of certain wage increases for two years (up to €780 per employee)
• 5% stamp-duty rate on family-business transfers retained

Environmental and Transport Initiatives

Sustainability remains a central focus:

• New grant for youth under 30 who surrender their driving licence — €5,000 annually for five years (subject to implementation rules)
• €1,500 annual incentive for individuals switching to motorcycles
• Eco-contribution on tourist accommodation raised from €0.50 to €1.50 per night, funding green projects
• €13.5 million investment in public spaces, pedestrian zones, and road improvements
• Gozo's bus fleet is targeted to become fully electric by 2026

Maritime, Aviation and Infrastructure

Malta continues to consolidate its global transport credentials, maintaining one of Europe's largest ship registries and over 900 registered aircraft. Ongoing investment in professional training and infrastructure supports further growth in these strategic sectors.

Final note

Figures and measures are derived from the 2026 Budget Speech and official documentation. Some measures will take effect once enabling regulations are published. Affected individuals should seek professional guidance tailored to their situation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.