New 2026 Income Tax Rates – What’s Changed?

From 1st January 2026 new income tax rates have been introduced for families with one or more qualifying children, as announced in the Malta Budget 2026.

Under the new rules, a child shall be considered as a qualifying child if they:

1. are not over 18 years old; or
2. if older than 18 years of age, they are under 23 years of age and in full-time education.

Additionally, the new income tax rates also distinguish between married rates and parent rates, each with distinct brackets for families with one qualifying child and those with two or more qualifying children.

To qualify from the married tax rates for families with one or more qualifying children, the couple must be resident in Malta, maintain under their custody a qualifying child/children and meet at least one of the following conditions:

1. at least one spouse must be a Maltese national or a national of an EU/EEA Member State; or
2. at least one spouse is a Long-Term Resident of Malta (defined by the Status of Long-Term Residents Regulations) and the child was born in Malta and is a resident in Malta.

Married couples from an EU/EEA Member State may also qualify where one spouse is not resident in Malta, as long as 90% of their worldwide income is derived from Malta and all other conditions are satisfied.

The new parent income tax rates for a parent with one or more qualifying children should apply to a parent who:

1. maintains a qualifying child/children under his/her custody (or pays maintenance in respect of a qualifying child/children); and
2. at least one spouse must be a Maltese national or a national of an EU/EEA Member State; or
3. at least one spouse is a Long-Term Resident of Malta (defined by the Status of Long-Term Residents Regulations) and the child was born in Malta and is a resident in Malta.

Individuals who are unmarried, widowed, divorced, or separated de jure or de facto may also qualify under the married income tax rates (except for the married rates with one or more qualifying children) if they maintain under their custody a qualifying child/children, are incapacitated by infirmity from maintaining themselves and are not in receipt of income exceeding the amount of €3,400 in their own right. The election to be taxed at the married income tax rate is made at the taxpayer’s discretion.

Employees who do not qualify for the new tax rates shall continue to be subject to the standard married, parent and single income tax rates.

Employees who have one or more qualifying children and who meet the conditions to benefit from the new tax rates should submit an updated FS4 Form to their employer, indicating the specific tax rate under which they wish to be assessed.

To this end, the Malta Tax & Customs Administration has updated the FS4 Form (Payee Status Declaration), adding new fields reflecting the changes mentioned above:

1. additional field about the taxpayer’s nationality;
2. information on whether the taxpayer is a Long-Term Resident in Malta in terms of the Status of Long-Term Residents Regulations;
3. the new income tax rates applicable from 1st January 2026; and
4. a confirmation that the applicable income tax rate that shall be deducted from the taxpayer’s salary by the employer.

The new 2026 income tax rates can be accessed here.