Parents will benefit from a major tax cut starting next year as part of efforts to address Malta’s low fertility rate, Finance Minister Clyde Caruana announced in the 2026 Budget. The measure will progressively widen tax bands between 2026 and 2028, increasing the tax-free income threshold each year. It will apply to all parents, with larger cuts for those with two or more children. Costing around €160 million annually, the measure is expected to benefit 68,000 families, saving parents an average of €2,400 in tax per year. From 2026, the tax-free threshold for parents with one child will rise to €14,500, increasing to €16,000 in 2027 and €18,000 in 2028, with higher thresholds for larger families. (Times of Malta)
Government to cover pay rises for private sector loyal workers
Private sector employees who have remained loyal to their employers could soon see a pay rise, with most of the increase funded by the government. Finance Minister Clyde Caruana announced that the state will cover 65% of workers’ pay rises for two years, up to €780 annually. For companies in Gozo, the government will shoulder 80% of the increase, capped at €960 per year. Only employees who have been with the same firm for at least four years will qualify. The measure will form part of the Micro Invest scheme, which will see its cap rise from €45,000 to €65,000 next year, and to €80,000 for Gozitan businesses. The move aims to help companies retain skilled workers amid mounting competition for talent. (Maltatoday)
Opposition: Budget distributes money but fails to solve problems
The Nationalist Party described the budget as one that “distributes money while debt explodes and problems remain”. In its reaction, the Opposition said the government will triple national debt to €14 billion by 2028, accusing Prime Minister Robert Abela and Finance Minister Clyde Caruana of burdening citizens with rising interest costs. The PN also noted that Ministers will receive a €1,700 annual increase. The statement highlighted continued traffic congestion, hospital waiting times and a €100 million cut in capital expenditure, which the PN said reflects collapsing infrastructure and uncontrolled population growth. “The government throws money around, but offers no real solutions,” the statement concluded. (The Malta Independent)
