The Malta Budget for 2026, presented by Finance Minister Clyde Caruana, outlines several key measures aimed for families, businesses with a focus on digitisation, supporting local enterprises, infrastructure projects and developing specific sectors.

In this blog, we’ll first look at the current state of the Maltese economy, and we’ll then go through a summary of the key takeaways from this year’s annual Budget.

The State of the Maltese Economy
GDP is up 3.1% this year in real terms, more than double the EU average. And it is expected to reach 4.1% growth by the end of the year. Gross Value Added is up 6% in nominal terms.For next year, the government expects GDP to grow at a similar rate, fuelled by domestic demand and public investment. Inflation is forecast to stabilise at around 2.2%.

Malta Budget Key Takeaways
The following is a breakdown of some of the highlights announced during this year’s Budget, split into themes.

 

COLA, COLA Bonus & Minimum wage
This year’s Cost-of-Living-Adjustment (COLA), calculated automatically based on inflation and other cost-of-living indicators, will see a weekly increase of €4.66.

 

Income Tax cuts for families with children
There are 4 new tax bands, depending on whether couples file tax under ‘married’ rates or ‘parent’ rates and based on whether they have one child or more:
– Married computation with one child
– Married computation with two or more children
– Parent computation with one child
– Parent computation with two or more children
Under the 2026 Budget’s revised income tax bands, families are set to benefit from substantial savings over the next three years. A married couple with one child, where only one parent is employed, will save approximately €4,720 over a 3 year period. Meanwhile, dual-income parents with one child will enjoy a more significant saving of around €3,500. Families with two or more children will see even greater relief: a single-income married couple will save €13,000 over a 3 year period, while dual-income parents in the same category will benefit from tax savings of €9,800 respectively over the three-year period.

 

Pensioners
Pensioners will get a €10 increase per week. The pension will be fully exempt in 2026.
Pensioners for widows will increase by €13.50 per week, whereas supplementary allowance will increase by €27.30 per week.
Pensioners born before 1962 qualify if their 2026 notional salary would exceed the maximum pension income of €25,000.

 

Children’s allowance
The income threshold to qualify for the higher rate of children’s allowance is €30,000. Families earning less than that will get an annual €250 increase in children’s allowance per child. Families earning less than €23,000 will get €417 per child.

 

Free AI learning
A more concrete commitment comes in the form of free Artificial Intelligence courses available to all citizens. Those who successfully complete the training will also receive a complimentary subscription to an AI platform, such as ChatGPT or Gemini. This initiative forms part of a €100 million national investment programme channelled through Malta Enterprise and the Malta Digital Innovation Authority (MDIA), aimed at advancing the country’s capabilities in AI, the Internet of Things (IoT), cybersecurity, and other emerging technologies.
Businesses investing in research, development and innovative projects, can now benefit from a 175% tax deduction on eligible expenses, which makes this an ideal time for firms to strengthen their digital capabilities and explore AI-driven solutions.

 

Property incentives
The Budget also cements the government’s commitment to home ownership, with the First-Time Buyers Scheme set to be formally written into Maltese law, transforming it from a temporary initiative into a permanent programme.
The Equity Sharing Scheme, which enables individuals to purchase property with financial assistance from the Housing Authority, will now be accessible to people aged up to 25. Meanwhile, the Deposit Payment Scheme for first-time buyers is being enhanced, increasing the eligible property value threshold from €225,000 to €250,000, further easing the financial burden for young buyers entering the housing market.
Habitual Inherited property tenants get a causa mortis tax break: the reduced 3.5% tax rate will now apply to the first €400,000.

 

Businesses
The Malta Chamber of Commerce has welcomed the Budget measures aimed at supporting SMEs, noting that several of its own proposals have been adopted by the government. The Chamber emphasized the importance of continued action on key challenges affecting businesses, including labour shortages, unfair competition, and traffic congestion.
Wage support mechanism for private sector employers
Under Malta’s 2026 Budget, the government is introducing a wage support mechanism aimed at assisting private sector employers in retaining long-serving employees.
Malta Enterprise will finance 65% of salary increases for employees who have been with the same company for over four years. The subsidy is capped at €780 per year per employee for companies based in Malta. For businesses located in Gozo, the government will cover 80% of the wage increase, up to a maximum of €960 annually.
This measure is part of an expansion of the Micro Invest scheme, which supports small and medium-sized enterprises (SMEs) in investing in their operations. The scheme’s benefits have been increased, with the maximum tax credit rising from €45,000 to €65,000 per year for businesses in Malta, and up to €80,000 for those in Gozo.
The government’s objective is to alleviate the financial burden on employers, enabling them to provide wage increases to their long-term employees while maintaining business stability. This initiative also aims to address challenges such as employee shortages and the need for fair competition in the labour market.

Family Businesses
A series of incentives and grants aimed at helping family businesses manage smooth succession and long-term continuity will be extended. The measures include tax reliefs, training vouchers, and financial assistance to support the digital transformation of business operations, ensuring that family-run enterprises remain competitive and sustainable across generations.
Small and Medium sized Businesses
Over the coming two years, businesses will be eligible for a 60% tax credit on investments in machinery, tools, software, IT systems, and cybersecurity infrastructure, with the benefit distributed over a four-year period.
In addition, the tax credit available under the Micro Invest scheme will increase to €65,000, covering up to 65% of eligible expenditure. Companies based in Gozo will continue to enjoy a further 20% top-up, maintaining the island’s competitive edge and encouraging continued investment in its business community.

Start ups
Supporting measures continue to exist for start-ups, aiming to foster innovation and growth in this sector. Assistance to start ups include free access to artificial intelligence, HPC and cloud services, saving up to Eur25,000.
Co-operatives
As of 2026, co-operatives will be exempt from submitting audited accounts.

 

Agriculture and Fishing Industry
The agriculture and fishing industries receive targeted support aimed at enhancing sustainability, modernizing infrastructure, and fostering competitiveness. For agriculture, the budget allocates funds for farmers to invest in sustainable practices and upgrade machinery, with grants available for environmentally friendly equipment and irrigation systems.
Incentives will be introduced for non-commercial farmers who lease agricultural land from the Government to enter into arrangements with commercial farmers to work their land.
Investment in the infrastructure will be undertaken to sustain the fishing industry and aid will be provided to decrease pollution and environmental impact.

 

Tourism
It was announced that tourists who pay 50c a night as an ‘eco-contribution’, will triple to €1.50 a night.
The Malta Hotels and Restaurants Association (MHRA) has welcomed the Budget, describing it as “balanced, responsible and forward-looking.” MHRA president Tony Zahra praised the approach, saying that by blending fiscal discipline with social support, the government has laid the foundation for Malta’s Vision 2050—focused on stability, sustainability, and shared prosperity. The association also expressed anticipation for future policies aimed at ensuring the long-term sustainability of the tourism sector, particularly measures addressing accommodation, infrastructure capacity, and the sector’s impact on local communities and the environment.

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