The Malta Budget 2025 introduces a range of financial measures aimed at fostering economic growth, supporting families, and enhancing social welfare. With a projected economic growth rate of 4.3% for next year, the budget focuses on tax relief, incentives for first-time homebuyers, and a host of social benefits, including increases in children’s allowances and pensions. New policies also target fostering employment flexibility for pensioners, increasing support for vulnerable families, and continuing sustainability efforts. This budget is designed to address both immediate economic needs and longer-term social goals, offering relief and growth opportunities across various sectors.
Download Budget 2025 factsheet
1. Economic Highlights
- Economic Growth: Projected at 4.9% for 2024, slightly slowing to 4.3% in 2025.
- Job Growth: Expected to rise by 4.6% in 2024, tapering to 4.1% in 2025.
- Inflation: Anticipated to average 2.5% this year and align with the ECB’s 2% target by 2025.
- Deficit and Debt: Budget deficit forecast to fall to 4% in 2024 and 3.5% in 2025, with Malta on track to meet the EU’s 3% deficit target. National debt stands at a manageable 50% of GDP, within the EU’s 60% threshold.
2. Taxation
- Income Tax Simplification: Adjusted tax brackets with increased non-taxable income thresholds, allowing 18,000 additional taxpayers to become exempt. Single earners may save between €435 and €675, while couples and families benefit from specific savings based on filing status.
- Tax on High Earners: Income over €60,000 will continue to be taxed at 35%.
- Private School Tax Credits: Expanded, with primary education eligible for €4,600 in tax credits, and secondary education for €6,500.
- VAT Adjustments: Women’s sanitary products and products for female cancer patients, such as mastectomy bras, are now VAT-free.
3. Business and Start-up Incentives
- Support for Public Healthcare: Tenders are to be issued to involve the private sector in hospital services like emergency care, intensive care, and acute psychiatric care, with a €14 million investment aimed at reducing wait times.
- Volunteer Support Tax Credit: Companies can receive up to €500 in tax credits for donations to voluntary organizations.
- Digital Identity Wallet: The government is planning a digital ID app for citizens and businesses to securely manage digital identities.
- Subsidies and Incentives for Sustainability: Ongoing support for PV panels, batteries, heat pumps, and well restoration, with reduced EV subsidies of €8,000 due to limited EU funding.
4. Immigration
- Policy in Development: While specific measures weren’t announced, the government indicates that the upcoming immigration policy will involve “hard decisions,” highlighting a continued focus on this issue.
5. Immovable Properties
- First-time Buyer Support: Schemes for first-time property buyers remain, including grants on first homes and a reduction in stamp duties.
- Incentives for Property Restoration: Fiscal incentives for restoring older properties continue, with capital gains tax exemptions and a VAT refund of up to €54,000, although new legal measures will aim to prevent misuse of these incentives.
- Second-time Buyer Stamp Duty Reduction: Buyers making their second home purchase will benefit from continued stamp duty reductions.
6. Social Measures and government support
- Minimum Wage: COLA is marked at €5.24 per week and minimum wage is set to increase by €8.24 per week, reaching €221.78 weekly. This aligns with a four-year government and social partner agreement.
- Children’s Allowance and Birth Support: Children’s allowance will increase by €250 annually, benefiting 63,000 children from 42,000 families. Families having a third child will receive €1,500.
- Foster and Carer Support: Foster care allowance rises by €10 per week, totalling €120 weekly per child. Qualifications for carer allowances for parents of disabled children will be broadened.
- Marriage and IVF Benefits: Marriage allowance rises by €170, and IVF treatment grants 100 hours of paid leave per treatment cycle.
- COLA Plus: Targeted at vulnerable workers, this payment remains at €1,500 per year, estimated to impact 100,000 families.
- Children’s Disability Allowance: Raised by €5 to €35 weekly, benefiting over 2,300 families.
- National Insurance Contributions: Those born after 1976 must make an additional year of NI contributions to qualify for a full pension.
- Energy and Water Grants: Subsidies continue for PV panels, RO systems, and heat pumps, aiding sustainability initiatives.
- Youth Health Incentives: Free six-month gym memberships for individuals born between 2005-2007 to promote youth health.
- Home Library Grant: A new €150 grant is available to vulnerable families for book purchases.
- Education Support: Each student will receive a €20 voucher for the National Book Fair, promoting literacy across all income levels.
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