In his budget speech this evening, Finance Minister Clyde Caruana announced that low- and middle-income people will benefit from significant savings as a result of changes to the country’s tax brackets. The changes, which will come into force in January, aim to ease financial pressure on working households due to rising living costs.

Under the revised system, the tax-free income bracket has been significantly expanded overall. Single individuals will now be tax-free on the first €12,000 of their earnings (up from €9,100), married couples will benefit from a tax-free threshold of €15,000 and parents will benefit from a tax-free threshold of €13,000. This expansion means more income will be held by individuals and families at the lower end of the income spectrum, marking a significant shift in Malta’s approach to income tax.

Income above these thresholds will be taxed at a reduced rate of 15% for earnings up to €16,000 and €23,000 for singles and married couples respectively, and at a reduced rate of 10% for parents with incomes up to €17,500. The government has positioned these regulations as a way to support families and ease the tax burden on low-income earners. The middle income tax bracket, which covers earnings of up to €60,000, will now be taxed at a consistent rate of 25%, simplifying the tax structure and making it more predictable for people in this range.

The tax rate for high earners with income over 60,000 euros remains unchanged at 35%. The government’s decision to leave this cap as is appears to be aimed at protecting the income of high-income earners while focusing on relief measures for low- and middle-income households.

According to projections, these changes will provide immediate benefits to taxpayers within the new thresholds. According to the ministry’s estimates, single payers will save between 435-675 euros, parents between 345-645 euros and parents between 375-650 euros.

Stay tuned for more updates from the 2025 Budget speech.

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