Budget 2025: Tax Slashed And Wider Brackets Introduced
Lower 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 this evening. The changes, set to take effect in January, aim to ease financial pressures on working households amid the rising cost of living.
Under the revised system, the tax-free income bracket has been expanded significantly across the board. Single individuals will now be exempt from tax 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. This expansion means more income will be retained by individuals and families at the lower end of the income spectrum, marking a substantial shift 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 earnings up to €16,000 and €23,000, respectively, and at a reduced rate of 10% for parents on income 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, covering earnings up to €60,000, will now be taxed at a consistent 25% rate, simplifying the tax structure and making it more predictable for those within this range.
For high earners with income above €60,000, the tax rate remains unchanged at 35%. The government’s decision to leave this top rate intact appears intended to preserve revenue from higher earners while focusing relief measures on lower and middle-income households.
According to projections, these changes will provide immediate benefits for taxpayers within the new thresholds. Single payers will save between €435-€675, parents between €345-€645 and parents between €375-€650, according to the ministry’s projections.
Stay tuned for more updates from the 2025 Budget speech.
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