Personal Income Tax in Malta 2026: Rates, Bands and Key Changes

By the EGM Assurance Editorial Team
Last reviewed April 2026
13 min read

Malta's personal income tax system operates on a progressive scale from 0% to 35%, administered by the Malta Tax and Customs Administration (MTCA) under the Income Tax Act (Cap. 123). For the 2026 basis year, four new family-oriented rate tables have been added alongside the existing single, married and parent rates, bringing the total number of active rate computations to seven.

This guide is written for employees, self-employed individuals and HR / payroll managers who need to understand which 2026 rate applies, how the new family rates work, what qualifies a child for the expanded bands, and the practical steps to ensure the correct rate is applied through payroll. It reflects the position as at April 2026.

1. The Malta personal income tax framework

Malta's personal income tax is levied under the Income Tax Act (Cap. 123). Tax is charged on chargeable income, which is total income from employment, self-employment, investment, rental and other sources, less allowable deductions and the applicable personal allowance embedded in the tax-free band. Rates are progressive: higher income is taxed at higher rates only on the portion of income that falls within each successive band.

Basis of taxation

Two factors determine the scope of Malta tax: residence and domicile.

• Resident and domiciled individuals are taxable on worldwide income.

• Resident but non-domiciled individuals are taxable on Malta-sourced income and on foreign income remitted to Malta; foreign income kept abroad is not taxed.

• Non-resident individuals are taxable only on Malta-sourced income.

Tax residency is established either by physical presence of more than 183 days in Malta during a calendar year, or by demonstrating that the centre of vital interests, including family, work and property, is in Malta. Tax is computed on the calendar year basis; the 2026 basis year covers income earned between 1 January and 31 December 2026, with the tax return filed and assessed during 2027.

2. The seven rate tables in force for 2026

For 2026, the MTCA recognises seven distinct rate computations. The selection of the correct rate depends on the taxpayer's personal status and, where children are involved, on whether those children meet the qualifying child definition set out below.

All seven rate tables share the same top-rate threshold: the 35% rate applies to chargeable income above EUR 60,000. What differentiates the tables is the width of the 0%, 15% and 25% bands at the lower end.

The standard single, married and parent bands were widened in the 2025 Budget and continue to apply in 2026. The 2026 Budget did not change the standard bands; it added four new family-oriented rate tables for taxpayers with qualifying children.

3. Qualifying child and eligibility conditions

The new 2026 family rates are not automatically available to all married couples or parents. They apply only where both the taxpayer meets the residency and nationality conditions, and the children meet the qualifying child definition.

Qualifying child definition

A child is a qualifying child for the 2026 family rates where all of the following apply at any point during the basis year:

• The child is not over 18 years of age, or is not over 23 years of age and is attending full-time education at a university, college or recognised educational institution.

• The child is born in Malta and is resident in Malta.

• The child does not earn more than EUR 3,400 per year in their own right.

Residency and nationality conditions

To apply the new 2026 family rates, the taxpayer must be resident in Malta and meet at least one of the following:

• The individual, or for married couples at least one spouse, is a Maltese national or a national of an EU or EEA member state.

• The individual, or at least one spouse, is a long-term resident of Malta as defined under the Status of Long-Term Residents Regulations, and the child was born in Malta and resides in Malta.

Where one spouse is non-resident in Malta, the new married rates may still apply if at least 90% of the couple's combined worldwide income is derived from Malta and all other conditions are satisfied.

If the qualifying child or residency conditions are not met, the standard rate tables continue to apply.

4. Choosing the right rate table

Every resident individual must apply exactly one rate table for the basis year. In most cases the correct table follows automatically from personal status.

Single parents: parent rates vs married rates

A single parent, widow, widower or de facto separated individual who maintains a child under their sole custody is entitled to apply married rates if that produces a more favourable result than parent rates. The taxpayer compares the tax liability under both computations and applies the one with the lower outcome.

Married couples: joint vs separate computation

Married couples in Malta are assessed separately by default. A joint computation option is available under Article 49A of the Income Tax Act, allowing the couple's combined income to be taxed under a single rate table. Joint computation is generally more favourable where there is a material income disparity between the spouses.

Qualifying child parent rates: which parent claims?

Where both parents qualify to apply the new family rates, only one parent may claim the rates in respect of the same child. In practice, the claim should be made by the parent whose tax liability is most reduced by the wider bands.

5. Other 2026 changes

Full pension income exemption from age 61

Effective 1 January 2026, pension income is fully exempt from income tax for individuals aged 61 and over. This applies to the whole amount of pension income, including amounts exceeding the statutory maximum state pension. Widow and widower pensions remain fully exempt.

Increased employment income deduction for low-earning single-rate taxpayers

Single-rate taxpayers whose only income is employment income, excluding director's fees, of up to EUR 12,445 during 2026 may deduct EUR 12,000 from their chargeable income.

Cost of Living Allowance

The 2026 Cost of Living Allowance announced in the Budget Speech of 27 October 2025 is EUR 4.66 per week. For full-time employees on a 40-hour week, the annual equivalent is EUR 242.32.

Birth and adoption bonuses

Bonuses given on the birth or adoption of a child have been increased:

• EUR 1,000 for the first child

• EUR 1,500 for the second child

• EUR 2,000 for the third child or more

6. Worked examples

The examples below are illustrative only and do not take account of deductions, credits or reliefs that may be available in specific circumstances.

Example 1: single individual, EUR 28,000 gross annual employment income

Example 2: married couple with two qualifying children, combined EUR 50,000

Under standard married rates, the same EUR 50,000 produces a higher tax liability because the lower bands are narrower.

7. The FS4 Form and payroll implementation

Tax withheld from employment income is collected through the Final Settlement System under which employers deduct income tax at source and remit it monthly to the MTCA. The FS4 Payee Status Declaration Form is the instrument by which employees inform their employer of the rate table that should be applied through payroll.

The updated 2026 FS4 Form

On 5 January 2026, the MTCA published an updated FS4 Form incorporating fields to cater for the new family rates. The updated form captures:

• The taxpayer's nationality.

• Whether the taxpayer is a long-term resident under the Status of Long-Term Residents Regulations.

• Qualifying child information, including number of qualifying children and their relevant circumstances.

• The new 2026 income tax rate table that should be applied by the employer.

Who should complete an updated FS4

Employees eligible for the new 2026 family rates must complete the updated FS4 and submit it to their employer. If they do not, the employer continues to apply the rate indicated on the previously lodged FS4, which may result in higher withholding than is ultimately due.

Employer considerations

Employers are not obliged to identify which employees are eligible for the new rates, but may wish to proactively notify affected employees to reduce the risk of incorrect deductions and support payroll compliance.

8. Special tax regimes at a glance

Malta operates several special income tax regimes for specific categories of taxpayer. These sit outside the standard progressive rate tables and apply flat rates.

Global Residence Programme

Open to third-country nationals taking up residence in Malta. Foreign-source income remitted to Malta is taxed at a flat 15%, subject to a minimum annual tax liability of EUR 15,000 and specific property conditions.

Malta Retirement Programme

Targets foreign pensioners. Qualifying pension income remitted to Malta is taxed at a flat 15%, subject to property conditions and other qualifying criteria.

Highly Qualified Persons Rules

Qualifying senior employees in designated sectors may benefit from a 15% flat rate on qualifying employment income up to a statutory cap, provided the conditions are met.

Returned Migrant Scheme

Maltese nationals returning from abroad may elect taxation on a source-and-remittance basis, with foreign-source income remitted to Malta taxed at 15%, subject to a minimum annual tax liability of EUR 2,325.

9. Frequently asked questions

My child was not born in Malta. Do the new family rates still apply?

Where the residency and nationality condition is met via the Maltese or EU or EEA nationality route, the child must meet the standard qualifying criteria. The born in Malta requirement specifically applies where the parent is relying on the long-term resident route to eligibility.

What if one spouse is a non-resident?

The new married rates may apply only if at least 90% of the couple's combined worldwide income is derived from Malta and all other conditions are met.

Can both parents claim the family rates for the same child?

No. Only one parent may claim the new family rates in respect of the same qualifying child.

Does the new rate reduce my tax in real time through payroll, or only at year-end?

Both. If you submit the updated 2026 FS4 Form to your employer, monthly FSS tax deductions will reflect the lower rate. If you do not, the lower rate can still be reflected in the annual tax return.

Is pension income really 100% exempt from 2026?

Yes, for individuals aged 61 and over. From 1 January 2026, pension income is fully exempt from Malta income tax without any cap tied to the statutory maximum state pension.

How is rental income taxed for individuals?

Rental income from immovable property located in Malta may be taxed either at the progressive personal rates together with other income, or at a 15% flat withholding rate on gross rental income without deductions. Which option is preferable depends on the taxpayer's circumstances.

What are the filing deadlines for 2026 income tax?

For individuals with other income or complex affairs, the paper tax return deadline is typically 30 June following the basis year, while the electronic deadline is typically 31 July. The MTCA publishes final deadlines each year and these should always be confirmed.

Related guides from EGM Assurance

• Payroll and FSS Obligations for Maltese Employers

• Directors' Fees and Taxes in Malta

• Malta Tax Refund System: How the 6/7 Refund Works

• Double Tax Treaty Network

Authoritative references

• Income Tax Act (Cap. 123)

• Malta Tax and Customs Administration

• MTCA 2026 tax rates publication

• Status of Long-Term Residents Regulations

• Malta Budget 2026

Not sure which 2026 rate applies to you?

We can confirm your eligibility for the new family rates and help update your FS4.

https://egmassurance.com/contact

This article is prepared by EGM Assurance for general informational purposes and reflects the legal and regulatory position in Malta as at April 2026. It does not constitute legal, tax or professional advice and should not be relied on as a substitute for advice specific to your circumstances. Legislation and regulatory guidance are subject to change, so current obligations should always be confirmed before acting.