Low and middle income earners will benefit from significant savings as a result of changes to the country’s tax brackets, Finance Minister Clyde Caruana announced in his Budget speech tonight. The changes, due to come into force in January, aim to ease financial pressures on working households amid rising cost of living.

Under the revised system, the tax-free income category has been significantly expanded across the board. Single people will now be tax-free on the first €12,000 they earn, up from €9,100, while married couples will enjoy a tax-free threshold of €15,000 and parents €13,000 euro. This expansion means that individuals and families at the bottom of the income spectrum will keep more of their income, marking a substantial change in Malta’s approach to income taxation.

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

For high earners with incomes above €60,000, the tax rate remains unchanged at 35%. The government’s decision to leave this top rate intact appears intended to keep income from higher earners while focusing relief measures on low- and middle-income households.

These changes are projected to provide immediate benefits to taxpayers in the new thresholds. Single payers will save between €435-675, parents between €345-645 and parents between €375-650, according to the ministry’s forecasts.

Stay tuned for more updates from the Budget 2025 speech.

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