New income tax rates in Malta came into effect on 1st January 2026, introducing changes for families with one qualifying child and for families with two 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 that came into effect in 2026 also differentiate 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 benefit from the married tax rates for families with one qualifying child or two 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 qualifying child or two 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 benefit under the married income tax rates (except for the married rates with one qualifying child or two or more qualifying children) if they maintain under their custody a qualifying child/children, who 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.

The married, parent and single income tax rates shall continue to apply to married couples who are resident in Malta and do not qualify for the new income tax rates mentioned above, parents who are resident in Malta and do not qualify for the new parent rates and to resident individuals who do not meet the criteria for any of the updated income tax rates.

To reflect the changes implemented by the Malta Budget 2026, the Malta Tax & Customs Administration has updated the FS4 Form (Payee Status Declaration). The revised form includes:

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.

This article has been prepared by the law firm’s Tax Team. For more information concerning any personal or corporate tax matter, please do not hesitate to contact the team on tax@fenechlaw.com