Malta Budget 2026 | What matters to business

Download our Budget 2026 review, prepared by our tax professionals, to see what matters most to business.

Economic outlook

Malta’s economic performance continues to show resilience and momentum. GDP growth for the first half of 2025 stands at 3.1%, with projections indicating a rise to 4.1% by the end of the year. This upward trend is driven by a surge in tourist arrivals and spending, a rise in service exports, stronger local demand, and increased public expenditure.

Meanwhile, inflation is expected to remain contained at 2.2%, supporting stable consumer purchasing power. The annual deficit is forecast to reach €820 million, or 3.3% of GDP, with a gradual reduction anticipated—2.8% in 2026, falling to 2% by 2028.

On the fiscal side, government lending is projected to total €11.6 billion, representing 47.1% of the annual budget. Notably, 81% of this lending is financed through local government bonds, reflecting a strong domestic investment base and confidence in national financial instruments.

Social measures

• Children’s allowance rate will increase for families who earn less than €30,000 annually by €250 per year per child.
• The bonus paid to parents for a newborn or adopted child will increase to €1,000 for the 1^st child, €1,500 for the 2^nd child and €2,000 for the 3^rd or more children.
• A €500 grant for families with students in Years 10 and 11.
• Parental, bereavement and miscarriage leave shall be extended to self-employed parents.
• Increase in the pension for retirement, age, invalidity and widows of €10 per week.
• Additional increase in widow’s pension of €3.50 per week and a further increase in widow’s pension for individuals who are maintaining children up to the age of 23 of €10 per week.
• The home carer allowance will increase to €9,000 per annum whereas the Helper of Your Choice subsidy shall increase to €10 per hour.
• Change in the criteria in order settle prior unpaid social security contributions to reach the minimum 10-year requirement to qualify for a retirement pension.
• Increase in tax allowable deductions for individuals who pay fees for elderly residences or residences for the disabled will be increase to €4,500 per year.