Malta’s 2026 Budget: What It Means for You

Malta’s 2026 Budget: What It Means for You

As we step into 2026, Malta’s new Budget, presented under the theme “A strong economy, a future for our children”, continues to balance economic growth with social support and sustainability. The Government projects a deficit of 2.8% of GDP, placing Malta below the EU’s 3% benchmark, while maintaining energy price stability and prioritising investment in healthcare, education and infrastructure.

Designed to support families, strengthen businesses and encourage innovation, the 2026 Budget introduces a wide range of measures aimed at improving quality of life and ensuring long-term fiscal stability.

Key Measures Announced in the Budget 2026

Income Tax Reform
• Major restructuring of income tax rates for families with dependent children, phased in from 2026 to 2028
• Families qualify if their youngest child is under 18 (or under 23 if in full-time education)
• Employers required to update payroll systems to reflect new rates

Cost of Living Adjustment (COLA)
• €4.66 weekly increase for all workers and pensioners

Pensions and Social Benefits
• €10 weekly pension increase for around 100,000 pensioners
• Additional €3.50 weekly for approximately 7,000 widows’ pensioners
• Children’s allowance threshold raised to €30,000, with an extra €250 per child annually
• Birth and adoption bonuses increased to €1,000 (first child), €1,500 (second) and €2,000 (third or subsequent)
• Therapy Credit extended to age 23; foster allowances increased
• Stipends for students increased by 15%

Business Measures
• €100 million national technology investment programme covering AI, IoT, blockchain, robotics and cybersecurity
• 175% tax deduction for R&D expenditure
• 60% investment tax credit on qualifying capital investments
• Accelerated tax relief for capital expenditure in modernisation and digitalisation
• MicroInvest upper limits increased to €65,000 (Malta) and €80,000–€85,000 (Gozo)
• Launch of a National Talent Register to improve labour market matching

Housing & Property
• First-time buyer €10,000 cash grant and duty exemption on the first €200,000 maintained
• Reduced 3.5% causa mortis duty extended to the first €400,000 for inherited homes used as a main residence
• Deposit scheme ceiling raised to €250,000 with 25-year repayment term
• Equity sharing eligibility widened to age 25+ and separated individuals

Sustainability & Energy
• Continued energy and fuel price stabilisation
• Second interconnector to be completed in 2026 (~€300 million project)
• Investment in battery storage and offshore wind energy projects
• Increase in the Tourist Eco Contribution from €0.50 to €1.50 per night
• Major upgrades in waste treatment, water quality and green public spaces

Infrastructure & Transport
• Expansion of electric bus fleet and fast ferry services
• Road upgrades for congestion relief and safety
• Continued development of cycling and pedestrian infrastructure

Gozo Development
• €280 monthly grant for Gozitan students studying in Malta
• Health and education infrastructure investments
• Ongoing projects supporting tourism, agriculture and connectivity

Want to learn more?

How AE Business Advisors Can Help

Navigating Malta’s evolving fiscal and regulatory environment can be complex. AE Business Advisors provide strategic tax and financial advisory services to help individuals and businesses make the most of available incentives, plan ahead for future changes, and strengthen their long-term position.