Tax Benefits and Incentives for Individuals and Businesses in the Malta Budget 2026

- Malta’s economy continues to outperform the EU average, with real GDP growth reaching 3.1% in2025—more than double the EU’s 1.4%. Projections indicate further expansion to 4.1% by year-end, driven by strong domestic consumption, public investment, and a buoyant tourism sector. Gross Value Added (GVA) rose by 6% in nominal terms, reflecting sustained economic momentum.

- In 2026, growth is expected to continue at a similar pace, supported by private consumption and government-led investment. Inflation is forecast to stabilise at 2.2%, returning to pre-crisis levels. To ease inflationary pressures on households, the government has announced a weekly Cost-of-Living Adjustment (COLA) of €4.66—slightly lower than the €5.24 granted in the previous year, in line with moderating inflation.

- On the fiscal side, the budget deficit is projected to narrow to 3.3% of GDP in 2025, improving on earlier estimates, and is expected to fall further to 2.8% in 2026—bringing Malta back within the EU’s Stability and Growth Pact threshold. The debt-to-GDP ratio stands at 47.1%, well below the EU average and significantly lower than the 70% recorded in earlier years. The consolidated fund deficit is forecast at €995 million in 2025, with the overall government deficit estimated at €820million.

The Malta Budget 2026 reflects the government’s strong commitment to supporting families and fostering long-term social wellbeing. At its heart is a landmark tax reform designed to ease financial pressures on parents, especially those raising children. By introducing new tax categories tailored to family structures, the government is ensuring that more income remains in households, empowering parents to invest in their children’s future.

Children Allowance increased in 2026

Beyond taxation, a wide range of family-focused measures have been announced. These include increased children’s allowances, generous grants for newborns and adopted children, and enhanced support for foster and adoptive parents. Families caring for children with disabilities will benefit from extended therapy refunds, while working parents receive additional in-work benefits.

Family-Centred Support

The government’s approach goes beyond short-term relief. It aims to create lasting financial stability for families, encouraging higher workforce participation and addressing demographic challenges such as Malta’s low fertility rate. At the same time, pensioners and vulnerable groups are not left behind, with targeted increases in pensions, supplementary allowances, and care-related subsidies.

These initiatives are made possible by Malta’s stable economic and fiscal position, allowing the government to invest confidently in its people. Budget 2026 is a clear statement that families remain at the centre of national policy.

Budget 2026 underscores the government’s commitment to fostering a dynamic, future-ready economy by supporting businesses—especially SMEs—and driving innovation. The approach balances immediate relief with long-term transformation, ensuring enterprises are equipped to thrive in a rapidly evolving global landscape.

Central to this strategy is a suite of incentives aimed at reducing operational burdens and encouraging investment in digitalisation, research, and workforce development. Businesses investing in innovation, cybersecurity, and modern technologies will benefit from enhanced tax credits and expanded support schemes.

Tax Inititatives and measures

A summary of the measures below:

- Extension of existing benefits schemes for family businesses such as reduced stamp duty rate of 1.5% on intra-family transfers, grants on governance and succession planning, training, digitalisation and financial support for next generation family business members.

- Small enterprises and self-employed who will acquire an industrial garage to operate in, where the Government will cover up to 50% of the cost with a cap of Eur 300k.

- The Micro Invest Scheme has been widened to include digital solutions as eligible investments. Tax credits for Maltese businesses will increase to Eur 65k (up to 65% maxumum of eligible expenditure). Total aid for businesses in Gozo will increase to Eur 85k for specific categories and will maintain the 20% uplift.

- Accelerated tax deductions over a two-year period will be available for investments in AI, digitalisation, modernisation, automation and cybersecurity

- A tax deduction of 175% will be granted to businesses who invest on eligible research and innovation expenditure

- As part of the Microinvest, wage increases of employees in the private sector who have been employed with the same employer for more than 4 years shall be financed by the Government. There is a limit to a maximum of 65% of the increase for two years up to a maximum of Eur 780 per year. A maximum of 80% up to a maximum of Eur 960 per year for employees in Gozo.

- Investments in machinery, tools, equipment, software and cybersecurity solutions and others, in the next two years, will be eligible for a tax credit of 60% of the investment value, spread over 4 years. This is to aid enterprises investing in such expenditure with the aim of adding value and productivity or launching a new business. As an example: a company which invests Eur 100k in machinery will be able to benefit up to €60k in tax credits over 4 years.

- Cooperatives will be exempt from the obligation to submit audited accounts for income tax purposes as stipulated in the published rules.

- Increase in eco-contribution paid by tourists from Eur 0.50 to Eur 1.50 per night.

- The government is also investing heavily in emerging technologies, with a €100 million allocation for artificial intelligence, cybersecurity, and IoT. Citizens completing approved AI training will gain free access to advanced tools, promoting digital literacy and inclusivity.

- Read our dedicated article on Employment and Pension Initiatives in the Malta Budget 2026

- Read our dedicated article on Technology and Innovation Incentives in the Malta Budget 2026

- Read our dedicated article on Property Tax and Stamp Duty Measures in Malta Budget 2026

- Read our dedicated article on Support Measures for Family Businesses, SMEs and Young Entrepreneurs in Malta Budget 2026

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Alternatively, you can view and download the full Malta Budget for 2026 in PDF format here.