Finance Minister rules out new taxes ahead of Budget 2026

Finance Minister Clyde Caruana has stated that the upcoming Budget 2026 will not introduce any new taxes or increases to existing ones, citing Malta’s strong economic performance as the basis for this decision.

Speaking during an appearance on Insights on TVM+, Minister Caruana emphasised that Malta’s economic growth, currently the fastest within the European Union, provides sufficient fiscal space to maintain Government support measures without imposing additional burdens on businesses or households.

The Minister reiterated that there is “no need” for new taxes at this stage, but stopped short of outlining specific measures to be included in the October budget.

A look at last year’s budget

One of the main features of the 2025 budget was the widening of income tax brackets, which will leave €140 million in the pockets of tax payers in Malta. 

The threshold under which no tax is paid increased from €9,100 to €12,000. This means that the first €12,000 are not taxable. A rate of 15 per cent was applied to income between €12,001 and €16,000. Income between €16,001 and €60,000 is taxed at 25% per cent, and income over €60,000 remained at 35 per cent.

This means that anyone taxed under this computation saw a tax reduction valued between €435 and €675 per year. The maximum reduction benefits all those earning more than €19,500 annually. This benefits not only individual taxpayers but also married couples who choose to be taxed separately. In this case, the benefit for that household could be doubled.

Married Computation

The threshold under which no tax is paid was increased from €12,700 to €15,000. Therefore, the first €15,000 are not taxable. A 15 per cent rate will apply to income between €15,001 and €23,000, while income between €23,001 and €60,000 is taxed at 25 per cent. Income above €60,000 remained taxed at 35 per cent.

Anyone taxed under this computation should see a tax reduction valued between €345 and €645 per year. The maximum reduction will benefit all those with an annual income over €28,700.

Parent Computation

The threshold under which no tax is paid increased from €10,500 to €13,000, meaning the first €13,000 are non-taxable. A rate of 15 per cent applies to income between €13,001 and €17,500, while income between €17,501 and €60,000 is taxed at 25 per cent. Income above €60,000 remains taxed at 35 per cent.

Anyone taxed under this computation should see a tax reduction valued between €375 and €650 per year. The maximum reduction will benefit all those with an annual income above €21,200.

Tax compliance

The percentage of tax returns submitted within the stipulated deadlines increased from 73 per cent in 2023 to 93 per cent in 2024.

In addition, Minister Caruana shared that in the first six months of 2024, €300 million in tax arrears were collected.

As of the time of last October’s budget, 1,200 re-payment agreements were concluded between the tax authorities and taxpayers in default.