Malta Budget 2026

Below are the salient points of the Malta Budget for the year 2026 which was presented to the House of Representatives by the Hon. Clyde Caruana, Minister of Finance, on 27 October 2025.

Economic Performance

• Economic Growth – Malta registered an economic growth of 3.1% in the first 6 months of 2025. Inflation is expected to be at around 2.2%.
• Cost of Living – The Minister announced that the cost of living allowance (COLA) is set to be €4.66 per week. An ongoing additional COLA mechanism for lower-income household will be implemented.
• Contributions to social security – Social Security contributions paid before turning 18 will now contribute toward pension entitlements.
• Economic Outlook – There will be a projected real GDP growth of 4.1% in 2025 and sustained expansion through 2026. The Minister announced that the budget deficit is expected to decline to 2.8% of GDP next year, comfortably within EU fiscal parameters, whilst the debt-to-GDP ratio will remain below 50%.

Tax

• There will be no new or increased taxes in 2026.
• Tax cuts for families with children – The Minister announced gradual tax reductions over three years between 2026 and 2028 for parents with one child or more. The reform represents an overall €160 million tax cut benefiting approximately 68,000 parents.
• Tax exemption for pensioners – Pensioners will continue to be exempt from tax on income up to the level of the maximum pension, including any bonuses. Starting from next year, those with higher incomes will benefit from a tax exemption on twice that amount.

Pensions & Social Benefits

• An increase by €10 Euro weekly is set to benefit 100,000 pensioners.
• Those who receive a widow's pension will get an additional average increase of €3.50 per week.
• Married pensioners whose payments are reduced because their spouse also receives a pension will see weekly increases ranging from €2 to €14.
• The Minister announced adjustments to disability, carer, and widow benefits, alongside higher allowances for low-income and vulnerable groups.
• Allowance for children is set to increase by €250. For each child born parents will receive €500, with parents receiving €1,000 for their first child, €1,500 for the second, and €2,000 for the third.
• Foster care, adoption, and in-work benefits are also expected to increase.
• The Minister announced expanded maternity and parental support, with additional measures for carers and individuals in rehabilitation program

Gozo

• The Minister explained that investments will continue in transport, infrastructure, and education to boost national competitiveness.
• Post-secondary and tertiary students are set to receive €280 per month.
• Gozo will receive targeted funding to improve digital connectivity, healthcare services, and tourism infrastructure

Investment, Education, and Infrastructure

• The Minister announced upgrades to health infrastructure, with continued improvements to hospitals and medical equipment.
• There will be projects in transport and the environment, covering public transport electrification, better waste management, and new public spaces.
• Further investment will be made in education and skills, including training for new industries like AI, digital finance, and green technologies.

Sustainable and Affordable housing

• The Minister announced that the first-time buyers grant of €1,000 per year for ten years will be extended.
• The 'Irrinova Darek' renovation and energy-efficiency grant scheme will continue and expand, with more localities set to be included in 2026.
• Funding will be directed toward affordable housing initiatives and environmentally friendly urban development.

International Reach

• The Minister explained that Malta remains committed to international cooperation, with a focus on staying competitive in finance, shipping, and aviation, alongside adherence to EU rules.

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