Malta – Changes in Tax Rates, Pension & Social Security Contribution Rates – 1st January 2026

Tax rates

New Parental Tax Bands: Introduction of four new income tax rate categories for parents (married couples or single parents with 1 or with 2+ children). These provide higher tax-free thresholds and lower rates on initial income brackets. 

Married Computation with one Child 2026

Parent with One child 2026

Married computation with 2 or more child

Parent computation with 2 or more child 2026

Pension Income Tax Exemption

Starting in 2026, all retirement pension income is fully exempt from income tax in Malta for individuals aged 61 and over. This represents a change from 2025, when 80% of pension income (up to the maximum pension amount) was tax-free, with the remaining 20% (or amounts exceeding the maximum pension) still being taxable. As of 2026, 100% of pension income is exempt, including any amount above the state pension maximum, effectively removing tax on pensions. Widow/er’s pensions also remain fully exempt.

Pensions for widowers are set to rise by €3.50 weekly. Widowers who are raising children will receive an extra €10 per week until the child turns 23.

Social Security (Class 1) – 2026

Note: *Or if the employee chooses, 10% of the basic weekly wage. This rate of contribution entitles the contributor to pro-rata contributory benefits

• Basic weekly wage or the weekly equivalent of the basic monthly salary.
• For percentage rates, the weekly rate payable is calculated to the nearest cent.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.

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Malta – Changes in Tax Rates, Pension & Social Security Contribution Rates – 1st January 2026

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