As it happened: Clyde Caruana delivers Budget 2026 speech
Minute-by-minute updates of Budget Day measures and reactions to them
Finance Minister Clyde Caruana has outlined the government's spending and income priorities for 2026 in his annual Budget speech.
Families with dependent children are the main beneficiaries of Budget 2026, as the government unveiled a fiscal plan aimed at tackling Malta’s fertility crisis.
Tax cuts for parents - described as the largest tax reduction in Malta’s history for families with children - will cost around €160 million to implement and were by far the standout measure of Caruana’s two-and-a-half-hour budget speech.
The address was delivered against the backdrop of a protest over proposed planning laws, with demonstrators gathered outside parliament calling on the government to return to the drawing board.
Caruana described the tax cuts for parents as the most important measure he had introduced in his time as finance minister.
He painted a vibrant picture of the economy, projecting the deficit to fall from 3.3 per cent of GDP this year to 2.8 per cent next year, below the EU’s three per cent threshold.
- Budget 2026 at-a-glance: What's in it for you?
- Budget Calculator: How tax cuts will impact your take-home pay
- How social partners, unions and lobby groups reacted
- Alex Borg and PN's reaction
- Broad tax cuts unveiled for parents
- COLA increase of €4.66 per week
- Deficit to fall to 3.3% this year
- Pensions to rise by €10 per week
- Tourist eco-tax to triple to €1.50 per day
- Companies to get state help to give pay rises
- Stipends to rise by 15%, gym membership scheme expanded
Feel strongly about a measure or sector? Share your thoughts at newsroom@timesofmalta.com or send us a message on Facebook.
Refresh the page for the latest updates.
As it happened
Live blog ends
11.05pm And that brings us to the end of today's live blog. It was a shorter, more focused budget than some others in recent years, with a concerted focus on helping families with children but fewer measures tackling other sectors.
We'll have more reactions and analysis in the coming days. Thank you for having joined us.
Robert Abela's reaction to the Budget
11pm We've got a full report on the first reactions to the Budget by the prime minister, deputy prime minister and finance minister. Robert Abela called it the "best budget in Maltese history". Ian Borg highlighted the government's willingness to face challenges. And Clyde Caruana argued tax cuts could also mean more free time for parents.
From left: Ian Borg, Robert Abela and Clyde Caruana address the press. Photo: Chris Sant FournierGozo Business Chamber reacts
10.29pm Positive noises from the Gozo Business Chamber, which says the budget is a “socially oriented one” that also incentivises businesses.
It's pleased to see a focus on start-ups, provided there's a clear commitment to ensure the start-up framework is also implemented in Gozo.
“Gozo needs a fully developed start-up ecosystem, centred around the Gozo Innovation Hub, which is currently not being utilised to its full potential," it says.
It adds that it would like to see eco-contribution funds generated in Gozo ring-fenced, to be spent on tourism-related projects on the island itself.
Alex Borg's first take on the budget
10.13pm We shared some of Alex Borg's comments on the budget earlier. Here's a more comprehensive report on the Opposition leader's first response to the Budget 2026 speech. A video of his press conference is available further down in this blog.
Alex Borg, flanked by Adrian Delia and Jerome Caruana Cilia. Photo: Chris Sant FournierUĦM reacts
10.10pm UĦM Voice of the Workers is pleased to see new tax brackets for parents, but believes more needs to be done.
“A demographic policy cannot rely solely on fiscal adjustments- it must be accompanied by measures that allow workers to spend more quality time with their families,” UĦM chief executive Josef Vella said.
UĦM said it was disappointed that the government ignored its proposal to study a 35-hour work week. Many Maltese workers, it noted, work more than 40 hours a week.
Malta Chamber reacts
10.06pm The Malta Chamber of Commerce welcomed the Budget’s focus on supporting families and improving their disposable income. It also welcomed measures aimed at addressing the business community’s transition towards AI adoption and digitalisation.
It's not all positive, though. Budget 2026 failed to address Malta’s “chronic traffic congestion”, the Chamber noted, adding that COLA remains taxed and auto-enrolment pensions remain nowhere to be seen.
Abela: 'Best budget in Maltese history'
10pm Abela describes this as “the best Budget in Malta’s history”.
“We used to be a country with high unemployment,” he says. “Now we have the lowest unemployment rate in Europe”.
He credits that to what he describes as Labour’s “expansionary politics of support”.
“For the first time, we will have middle-class families that will not pay a cent of income tax for almost a quarter of a century,” he says. “Others took away their children’s allowance, we take away their income tax.”
Robert Abela holds post-Budget press conference
9.50pm Alex Borg is still answering reporters' questions and we'll have a full report of that later.
Meanwhile, Robert Abela, Ian Borg and Clyde Caruana are holding a joint press conference. Watch it in the video below.
Borg: Good things, but worrying ones too
9.47pm "There are good things, and we want to keep them," he says. "But we also want budgets to ensure nobody is left behind.
"Another budget has gone by without a plan for a proper mass transportation plan, and no real plan to tackle overpopulation or the cost of living."
Borg also notes that capital expenditure is expected to drop by €100 million next year, and says that is concerning.
The PN leader says their vision for new tax brackets for parents would have left more money in parents’ pockets than the government’s.
Alex Borg reacts to Budget
9.45pm The PN leader is holding a post-Budget press conference.
ADPD reacts
9.35pm The Green Party, ADPD, described the government’s 2026 Budget as a missed opportunity to properly invest in Malta’s sustainable future.
“The Government is borrowing against our children’s future,” ADPD said. “We are piling up debt to support a growth model that exploits resources, deepens inequality, ignores our ecological limits and hampers future generations from taking their own decisions. This is fiscal irresponsibility, not sustainability.”
It also took issue with the way tax cuts for parents were structured.
"Those who are at the lower end of the income bracket should benefit much more than those at the upper brackets, for the simple reason they require much more help," it said.
How will tax cuts affect you?
9.22pm Trying to calculate your tax bill can be headache-inducing at the best of times. So instead of hammering away at your calculator, why not use our own custom-built budget calculator?
We've partnered with HR platform Buddy to make it easy to calculate how Budget 2026 measures announced tonight will impact your take-home pay.
If you're a parent, be sure to select the 'parent' or 'married' computation and input how many children you have.
UPE reacts
9.21pm The Union of Professional Educators is not impressed.
This was a “pre-election budget”, the union says,
“This is a budget that shows no vision or drive to ensure that workers are not exploited, that their rights are protected and that they receive a fair pay,” the UPE says.
It's not happy teachers, KGEs and LSEs will not get new laptops and notes there's no indication that all schools will be equipped with air conditioning.
Caruana's closing battle cry
9.15pm The finance minister comes to his closing remarks.
Around Europe, countries are growing at around 1% per year, he says.
"They’re not moving forward, they’re moving back in some respects. When coupled with the looming threat of war, you realise how big our challenges are.
“We cannot be carried by these currents,” he says. “We will not allow fear to dictate our policies.”
Caruana says the country needs “responsible” policies rather than populist ones. And he describes the tax cuts for parents announced tonight as the most important measure he’s ever introduced as finance minister.
“I am proud of it because it is based on principles I believe in. When you are truly visionary, politics can change a country’s destiny.”
Malta Development Association reacts
9.12pm The MDA is broadly positive of the budget, with some reservations about the decline in capital investment. It welcomed tax cuts for parents, and other social measures, and said it was also pleased about the lack of new taxes.
Social measures are sustainable thanks to the economic growth the country has achieved, the MDA says, noting the property and construction sector's contribution to that economic growth.
Caravan and camping site in the north
9.10pm A caravan site in Mellieħa's Aħrax will be upgraded, while a new, as-yet unnamed campsite somewhere in the north will be opened.
Valletta's City Gate Arcade to get a facelift
9.09pm There will be a "substantial renovation" of the City Gate arcade at the entrance to Valletta, the minister says without elaborating.
A soundstage at film studios
9.06pm It's been promised for years, and here it is again: there will be a public call for offers to build a sound stage at Malta Film Studios, the minister says.
Crumbs for culture
9.04pm We're in the home stretch now, everyone's running out of steam and so are the pledges.
Take culture: the priority will be the carnival hub in Malta, the minister says, along with work to restore Villa Guardamangia. But that's it, apart from a vague promise to launch a pilot project to find sites for 'Creative Arts Spaces'.
Introducing overseas Maltese to home
9.02pm Here’s a novel one: the minister pledges a scheme to encourage children of Maltese expats to come study or work in Malta. It will target people aged 18 to 30 whose Maltese parents live abroad.
Malta Employers Association reacts
9pm The MEA is positive overall, praising the budget for providing measures that balance economic growth, productivity and social wellbeing. It's also pleased with measures to support SMEs.
However, it notes no real “concrete commitment” to steer the economy away from excessive construction to other sectors, or fix problems with the education system.
And while it welcomed fiscal measures to address declining birth rates, it wants more to address the issue, including more flexible work arrangements and stronger childcare and parental support infrastructure.
Police, CPD and AFM
8.57pm Not much of note here: work will start to restore police stations in Paola, Mosta, Sliema, Qormi and Rabat. More CCTV cameras will be installed in Paceville and Bugibba.
The Civil Protection Department will get two new fire trucks focused on putting out EV fires, new vehicles and equipment.
The Armed Forces will get a new helicopter and plane by 2028, as well as new robotic equipment for the bomb disposal unit.
Cash grant for Gozo students
8.52pm If you’re a student from Gozo who is studying in Malta, you will start receiving a €280-a-month cash allowance. Around 700 students stand to benefit.
Gozo
8.47pm There’s a pledge to rebuild roads in Rabat and Nadur, and talk of a study to look at ways of improving traffic flow in congested Victoria.
A call for tender to develop the Gozo airfield will be issued in “the coming months” and schools in Kerċem and Żebbuġ will get under way.
Infrastructure projects
8.43pm Apart from the completion of the Msida Creek flyover project, you can expect works to develop water reservoirs and a jogging track in Ta’ Qali and the start of a “massive” project to regenerate the Birżebbuġa promenade.
The Birżebbuġa project will be the biggest infrastructural expense of the year, the minister says.
Transport
8.42pm Not much new here: a ferry service from Valletta to Bugibba and Gozo will begin, and work on a a ferry terminal in Marsascala will too.
There’s a plan to make all buses in Gozo electric, the minister says. As for the years-long pledge to shift trucks and delivery vans to off-peak times? "Discussions will continue," we told.
Oh, and a plan to give drivers under 30 a €5,000-a-year grant for five years if they hand in their driving licence will be introduced. The scheme was first promised for the summer but seemed to have been quietly shelved.
Animal hospital to reopen
8.40pm The minister says this much-missed facility will start operating in the coming weeks. Her promises that veterinary services will be available during the night, on Sundays and public holidays.
MHRA reacts
8.38pm The Malta Hotels and Restaurants Association (MHRA) is pleased with what it calls a “balanced, responsible and forward-looking” budget.
“By combining fiscal discipline with social care, the Minister has laid the groundwork for Malta’s Vision 2050- one centred on stability, sustainability and shared prosperity,” MHRA president Tony Zahra said.
It says it looks forward to further policy measures that provide a clear path for long-term sustainability of tourism, and address challenges such as tourism accommodation, infrastructure capacity and its impact on local communities and environmental management.
Forum Unions Maltin reacts
8.36pm Forum Unions Maltin is not too happy about a lack of work-life balance measures. The union had presented a set of proposals to the government, including the 36-hour work week, which, it argues, would create a better work-life balance for employees and their families.
“The confederation believes that it is of the utmost importance that due consideration is given to remote working for work-life balance and to reduce the acute traffic problems in Malta,” the union said.
It is more pleased with other measures, such as the increase in birth and adoption bonus and talks on improved maternity, parental and paternity leave.
Environment and agriculture
8.32pm The minister runs through various investment plans the government has to develop open spaces, build an incinerator, recycle waste and so on. But there’s nothing new or especially worth highlighting here.
He talks up the benefits of new cleansing equipment introduced in the past years: 96% of reports to the cleansing department were resolved, he says.
So pleased, he said it twice?
8.26pm A moment of levity: the minister mistakenly repeats a paragraph about the government having stabilised energy and fuel prices, prompting Robert Abela to laughingly tell him "it's important to repeat".
Health centres to open later
8.23pm Health centres in Qormi and Gzira will start operating 24/7, while one in Victoria will remain open until midnight.
The minister also pledges to set up three mental health clinics, says a new pharmacy at St Luke’s will begin operating and pledges to push forward with work to develop an outpatient facility at the St Luke’s site.
Grants for coeliac patients
8.22pm Previously, coeliac people received €65 a month in food vouchers. Now, they will get €85 and instead of vouchers they’ll get money into their bank account.
Pink slip formulary extended to 65-year-olds
8.21pm Back to the Budget speech, where the minister is saying eligibility for free medicines through the so-called pink slip [kartuna r-roza] is being extended. Previously, those over 75 with specific medical conditions and income qualified. Now, the eligibility age has been slashed to everyone 65 and over who receives a supplementary allowance.
Malta Union of Teachers reacts
8.17pm The Malta Union of Teachers (MUT) welcomed the €500 allowance increase for families with students in post-secondary education, €500 grant for families of students in Year 10 and 11 to assist students in digital areas and the 15% increase in stipends.
However, it's a bit irritated that the feedback it provided during the consultation phase through its position paper was ignored in this year’s budget.
Chamber of SMEs reacts
8.15pm The Malta Chamber of SMEs has welcomed measures which will assist SMEs to grow and remain competitive, such as improvements to the Micro Invest Scheme and increased support for digitalisation.
It said it was pleased the government had taken up a number of its proposals, and urged the government to continue addressing issues such as employee shortages, unfair competition and traffic congestion.
Higher stipends and gym memberships
8.11pm The minister cites encouraging statistics from Mcast, where STEM students are up by 48% in the past two years.
He also announces that student stipends (not just for Mcast) will rise by 15% as of next year. Government MPs are especially pleased with this one, banging and cheering as it's announced.
The free gym membership scheme introduced last year is also being extended: previously, it applied from age 18. Now it will apply to 16-, 17- and 21-year-olds too, provided they didn't already get a free membership last year.
Students will see an increase in stipends, with Gozitan students getting an extra monthly grant. Photo: Matthew MirabelliPN pokes at lack of traffic measures
8.06pm The PN picks on the fact that there are no plans, at least for the time being, for a mass transportation system. And to drive the message home, it uploads an image of the finance minister along with Robert Abela with the caption: 'Clyde Caruana has his way.'
It's in reference to the minister's words at a Times of Malta business breakfast last week, where he expressed scepticism over the feasibility of a mass transportation system.
Tourism eco-contribution to triple
8.04pm Currently, tourists pay 50c a night as an ‘eco-contribution’. That will triple to €1.50 a night, the minister says. It's not clear how the cap on the payment (which currently stands at €5) will change.
And there's another reminder that the government intends to bring in new regulation for short-term holiday rentals.
Tourists will have to pay €1.50 a night as an eco-contribution, up from the current 50c. Photo: Jonathan BorgPublic data on property sales
8.02pm The minister pays some lip service to the construction sector and previous work to better regulate it, but there’s little that’s new or of note here.
He promises a study to ensure that post-2030 buildings will be carbon neutral or carbon negative, and then says that the Property Malta Foundation will be setting up an online platform that will give people access to comprehensive data about property transactions.
Plans for an open space in Sliema
8pm The minister says the government will be looking into creating a public open space with an underground car park somewhere in Sliema. It will feature a square, shaded garden, playground and accessible pathways, he says.
And there will be public calls to restore and redevelop Fort Campbell and Selmun Palace in the coming year.
No more auditing for co-ops
7.58pm As of next year, co-operatives will be exempt from submitting audited accounts. The plan is intended to cut red tape for them.
Tax credits for capital spending
7.57pm Over the next two years, companies can get a 60% tax credit on investment in machinery, tools, software, IT equipment or cybersecurity tools. The tax credit will be spread out over four years.
State-sponsored pay rises?
7.56pm Tax credits for the Micro Invest scheme will rise to €65,000 up to a maximum of 65% of eligible spending. Gozo-based companies will continue to get a 20% boost over and above that.
And then there's an intriguing proposal: the government is promising to help cover the cost of salary increases for long-term workers. It will cover up to €780 a year in salary increases, with more help for companies in Gozo.
Deal with social partners
7.53pm The minister pushes back against calls to slash taxes for SMEs, companies and the self-employed and says he's negotiated a "set of measures" with social partners to help the private sector to the tune of €50 million.
Free ChatGPT subscriptions
7.51pm The government wants to develop a ‘digital identity wallet’ which citizens can use to digitally verify their identity and certifications. Not sure what exactly they mean by that.
But there’s a clearer pledge in the form of free Artificial Intelligence courses for all citizens. And anyone who completes a course will be eligible for a free subscription to an AI tool like ChatGPT or Gemini.
That’s part of a broader €100 million investment in AI, IoT, cybersecurity and the like through Malta Enterprise and MDIA funds.
An SME complex in Ħal Far
7.49pm Indis will be developing a “new complex” in Hal Far for SMEs within the next two years.
And in the coming days the government will be unveiling a new law regulating how Indis and Malta Enterprise function, “especially the way in which industrial land is allocated,” the minister says. No detail, but that strikes me as part of reform efforts in light of the Sofia Inquiry findings.
PN starts hitting back
7.46pm The PN has started hitting back at the budget measures. In a social media post, it says that while COLA payments will be of just €4.66 a week, ministers had pocketed a €1,700 a year increase.
They've taken a look at spending estimates provided by the government and it appears that salaries for ministers and parliamentary secretaries are rising by that amount.
Family business succession grants
7.40pm A range of incentives and grants intended to help family businesses plan and carry out smooth succession transfers will be extended. These range from tax breaks to training vouchers and aid to digitise business processes.
And onto the economy
7.38pm The minister’s budget speech is now shifting focus, away from individual incentives and more focused on the broader economy. He highlights business development grants such as the Business Development Scheme, which will be extended, and hints at “incentives” for start-ups that promote the Maltese language, culture or art.
The minister says there will be a "new measure" for mental health at the workplace. But no detail.
And there will be some legal changes to make it possible for 16-year-olds to become entrepreneurs and carry out commercial transactions as such.
Causa mortis tax break
7.34pm People who inherit the property they live in are to get a causa mortis tax break: the reduced 3.5% rate payable on the first €200,000 in property value will now apply to the first €400,000.
Incentives for property buyers
7.32pm A scheme to help first-time buyers with their deposit is to be expanded to cover up to €250,000 in property value. The scheme granting first-time buyers €1,000 per year over 10 years will be continued.
The government is also in talks with banks to make it easier for low-income people get on the property ladder, the minister says without elaborating.
The equity sharing scheme [which allows people to co-purchase a property with the Housing Authority will be extended to people aged 25. Separated people who use the scheme will be able to purchase properties up to €350,000 in value.
First-time buyers incentives first introduced in 2013 will continue and the government intends to make them permanent by codifying them into law, the minister says.
Furthermore, people who previously bought non-residential property (e.g. a garage or field) will still qualify as first-time buyers if buying their first home.
Negotiations to increase parental leave
7.30pm The government will start negotiations with social partners to increase maternity, paternity and parental leave, the minister says.
Parental leave rights (which entitle parents to take 8 weeks of leave per child until they’re 8) will also be extended to the self-employed. The self-employed will also be entitled to bereavement and miscarriage leave.
A public sector scheme that allows public sector workers to donate unused leave to those who need extra time off for health or personal reasons will be extended to allow new parents to also be eligible.
Home carer subsidy bump
7.26pm Senior citizens who hire a home helper will get a €10 per hour subsidy (up from €9/houre) . Those employing a full-time carer will get a €500 annual increase in their subsidy.
Utility bill help for some NGOs
7.25pm NGOs that work in the disability and animal welfare sector will qualify for lower rates for their water and electricity services.
A 75% disability benefit
7.24pm They’re adding a new tier of disability benefit, to provide some form of cover for people with a higher rate of disability than the average. Not much detail given here.
An 'inclusive hub' will be developed in Rabat and a respite centre opened in Dingli.
Contribution credits for parents
7.23pm Currently, parents who quit work to look after their kids get social security contributions covered for them until the child is 6. From next year, the maximum age limit will rise to 10 and be extended to up to three children.
€3.5m to address 'past injustices'
7.22pm In line with previous budgets, the minister has allocated money to go to workers of now-defunct state entities decades ago. Some workers of Telemalta, Malta Drydocks, Malta Shipbuilding, the Gas Board and Rediffusion will qualify. €3.5m has been allocated to these grants.
Auto-enrolment pensions are TBD
7.21pm Last year, the minister announced a drive to introduce auto-enrolment pensions into the workplace. The government then held a public consultation on the issue and talks with social partners are now in their “final stages”, the minister says.
But there's clearly no white smoke at this stage.
Senior citizens will see pensions rise. Photo: Jonathan BorgA new pension: partial invalidity
7.20pm Here’s an interesting one: there are plans to introduce a ‘partial invalidity pension’ for people with conditions that limit their working hours but do not render them entirely unemployable.
To qualify, people will need to have been receiving treatment for psychotic or acute depression or bipolar disorder for at least three years following diagnosis by a government-employed psychiatrist.
Invalidity pensions
7.19pm People unable to work will from 2026 be eligible to receive the equivalent of their two-thirds pension, rather than the minimum wage equivalent they previously got. The minister is at pains to note that fewer than 2,500 people are receiving such a pension.
Cheaper access to care homes
7.18pm There will be adjustments to the amounts pensioners have to pay to cover the cost of living in care homes. Elderly couples living in care homes will now have to pay 50% of their additional income over-and-above their pensions for care expenses, rather than 60%. And those who previously had 80% of their extra income deducted will now have a 70% deduction.
Deductibles on private care home costs are also rising to €4,500 a year, up from €2,500.
Better access to pensions
7.17pm Self-employed people who did not pay social security contributions during the COVID pandemic will be given a chance to regularise their position in the coming year, the minister says.
A scheme allowing people with contribution arrears to pay up to five years of missing contributions will be renewed. And social security contributions made before the age of 18 can now count towards pension contributions.
Furthermore, the law concerning the minimum number of contributions to qualify for a pension is to be changed to create a standard 10-year minimum threshold for all people.
Adjustment for pre-1962 pensioners
7.16pm Pensioners born before 1962 and impacted by an anomaly introduced when pensions were reformed 20 years ago will receive an “adjustment”, the minister says. It is not quantified. Around 20,000 pensioners will benefit.
And the tax-free threshold for pensioners who still work is to be increased to double the maximum pension, in line with a process that was announced in 2022 and will this year be fulfilled.
Keeping kids in school
7.15pm A grant for parents whose kids stay in school is to increase by €500 per child. Around 12,000 families will qualify, the minister says.
New tax bands are intended to encourage families to have more children. Photo: Chris Sant FournierEnergy benefit tweaked
7.14pm Eligibility for the energy benefit [a means-tested benefit given to low-income households] is being extended by upping the income cutoff point by €2,500 per couple.
More adoption refunds
7.13pm Parents who adopt a child overseas will be eligible for refunds up to €12,000, up from the previous €10,000 limit. If they adopt a child locally, they will get €2,000, double the previous €1,000 limit.
Foster parents will get an extra €10 per week. And unmarried parents who live with their parents will no longer get benefits slashed by 25%.
Higher birth and adoption grants
7.12pm If you have or adopt a child, you will get an extra €500 one-off grant. That means parents will get €1,000 for their first child, €1,500 for their second and €2,000 for each child after that.
Parents eligible for the In-Work Benefit grant will get an extra €75 per child.
Children's Allowance boost for low earners
7.12pm The minister says children’s allowance will only increase for low-income households [last year there was an across-the-board increase], given the tax band savings introduced this year.
The income threshold to qualify for the higher rate of children’s allowance is rising to €30,000. Families earning less than that will get an annual €250 increase in children’s allowance per child.
Boosts to carers' and disability allowances
7.11pm Various allowances related to carers and disability will rise by €4.66 per week, with a slightly higher increase for those with severe disabilities.
A Carers’ grant will rise by €179.24 and parents with disabled children will now get up to €1,000 refunded for therapies. This latter measure, previously applicable for children aged up to 16 will now apply to children up to 23.
Incentives to get off drugs
7.10pm Anyone who successfully completes a drug rehab programme and gets a job will get four years’ worth of social security contributions covered by the state. Employers who hire ex-addicts will be exempt from paying two years of their contributions.
Boost for unemployment benefits
7.09pm People looking for work are to get a benefits boost: they will now get paid the highest tier of benefits for 10 weeks, rather than six, though the total period of eligibility (16 weeks) remains unchanged.
Increases in supplementary allowances
7.07pm There are also increases in supplementary allowances: maximum grants will rise to €27.30 per week for couples and €14.40 for individuals. Income thresholds are also rising, to €20k for couples and €14k for single people.
There are several other increases which the minister is detailing and which will impact specific niches of senior citizens. These will benefit people with service pensions as well as those not eligible for a pension, among others.
Senior citizens who live at home or with relatives or in private care homes will get a €75 increase in their grant.
€10 per week pension increase
7.05pm That’s enough about babies. The minister is now talking about plans to strengthen welfare systems for senior citizens.
Pensions will rise by €10 per week, with an additional €3.50 per week increase for widows and widowers. Widows and widowers with children aged under 23 will also get an additional €10 per week increase.
Families with two or more children
7pm But the big savings will come for families with two or more children: for these families, the tax-free threshold will more than double over the coming three years, reaching €37,000 for those on a married computation and €30,000 each for those filing on parent computations [from the current €13,000 threshold].
In other words, families with two working parents earning €30,000 each will not pay any income tax at all as of 2028.
Caruana says that parents with two or more children will save up to €1,625 in tax each next year, rising to €5,000 each per year from 2028. The average parent will save €3,500 by that year.
Over a 25-year period, savings will range from €150,000 to €257,000.
“We are adding so much money into people’s pockets that the government will be indirectly paying a large part of people’s home loans, if not all of them,” the minister boasts.
Families with one child
6.56pm Families with one child stand to save between €2,175 and €3,600 per year by 2028, depending on their tax computation and income.
Over a 23-year period, savings will range from €65,000 to €113,000, the minister says.
How tax breaks will work
6.54pm They’re basically creating four new tax bands, depending on whether couples file taxes under the ‘married’ or ‘parent’ computation category and based on whether they have one child, or more:
- Married computation with one child
- Married computation with two or more children
- Parent computation with one child
- Parent computation with two or more children
We’ll have all the details for you in a separate article, but here’s the most important stuff:
- Non-taxable thresholds are rising, especially for those with two or more kids. If you’re on a parent computation and have two children or more, the tax-free threshold will rise from the current €13,000 to €30,000 by 2028.
- The non-taxable threshold will rise gradually over a three-year period, starting from this year.
- Parents will be eligible for these new tax bands until their children turn 23 if they remain in education, or until the children turn 18 if they quit school. Parents with two children will switch to the one child income tax brackets once their oldest child hits the age thresholds.
Big tax cuts for parents
6.50pm This is a big measure: new income tax bands for families with children. And there are major savings for families with two or more children.
All in all, the government expects this measure will save families a combined €160 million in income tax. To put that into context: the across-the-board income tax cuts announced last year cost €140 million.
“Last year’s tax cut saved the average person €500. This measure will save the average parent €2,400,” the minister says.
The tax cut for parents will be phased in across the next three years running to 2028.
€160m to slash taxes for parents
6.47pm The minister highlights five measures introduced by the Labour government to help families with children over the past decade: free childcare, breakfast clubs, free school transport, an in-work benefit and increases in children’s allowance. Together, these measures cost around €160 million a year.
He then takes a dig at the Nationalist Party, reminding people how the PN had slashed children’s allowance for families earning more than Lm10,000 a year back in 1995.
"The government used to think of families with children as a burden," he says.
Caruana alludes to Malta’s desperately low fertility rate [the EU’s lowest]. No single measure will fix this, he acknowledges, before saying the government is going to do something “so strong, nobody will expect it.”
"We will reduce the tax burden on parents by €160 million," he says.
Deficit forecast to fall to 2.8% next year
6.44pm By the end of the year, Malta’s debt-to-GDP ratio will be 47.1%, the minister says. And it will fall to pre-pandemic levels in the coming years. He reminds listeners that when Labour entered government, Malta had a 70% rate.
The deficit is expected to fall to 3.3% by the end of the year - better than the 3.5% the minister had projected a year ago. And it is projected to fall to 2.8% next year, the minister says.
Falling below that 3% deficit level is important to ensure Malta adheres to EU fiscal stability rules.
COLA increase of €4.66 a week
6.41pm The Cost-of-Living Adjustment for workers in the coming year will be €4.66 per week, the minister reveals.
That’s slightly lower than last year’s €5.24 COLA and significantly lower than the COLA figures we saw when inflation was peaking in previous years.
GDP growth of 4.1%
6.40pm
The finance minister now provides an overview of the macro situation: think GDP growth, debt and deficit rates and so on.
GDP is up 3.1% this year in real terms, more than double the EU average. And it is expected to reach 4.1% growth by the end of the year. Gross Value Added is up 6% in nominal terms.
For next year, the government expects GDP to grow at a similar rate, fuelled by domestic demand and public investment.
Inflation is forecast to stabilise at around 2.2%.
The opening soundbites
6.36pm Caruana begins the speech in time-honoured fashion: with a few soundbites about the government’s budget priorities and achievements.
“This budget does not fear the future, it builds it.” “This budget offers people courage and hope.” Etc. Etc.
And he indicates this speech will present some "courageous decisions" to help reverse our precipitous decline in fertility rates.
President Myriam Spiteri Debono presented with a copy of the budget speech. Photo: DOI/Kian BugejaFinance Minister begins speech
6.34pm Clyde Caruana has started delivering the 2026 Budget speech.
A PM rises to the beat of a drum
6.25pm As demonstrators chant "withdraw them now", footage captured from the crowd shows Prime Minister Robert Abela being whisked upstairs in a glass lift.
A Mintoff in the crowd
6pm For years, Dom Mintoff was a fixture in parliament on budget day.
In 2025, there's still a Mintoff there - but it's his daughter Yana, and she's among the protesters, not the politicians.
Yana Mintoff stands with activists. Photo: Chris Sant FournierMinister in parliament as activists march
5.48pm Clyde Caruana has entered parliament. He was greeted by Speaker Anglu Farrugia to the clicks of camera flashes.
Clyde Caruana walks into parliament. Photo: Chris Sant FournierMeanwhile, things were a bit louder just down the road: activists are marching down Republic Street chanting "withdraw them now". The 'them' being Bills 143 and 144 to amend planning laws.
Hard copies are out
5.30pm The Department of Information has released photos of hard copies of the Budget 2026 speech. Still no sign of digital ones, though.
And as an entirely irrelevant aside - why are local Budget speeches held so late in the day? In the UK, for instance, the speech is delivered around lunchtime.
Printed copies of this year's Budget speech can be seen in this photo provided by the Department of Information. Photo: DOI/Clodagh O'NeillActivists, we meet again
5.20pm The 2025 Budget speech was also noteworthy for something entirely unrelated to the speech itself: an act of protest by Moviment Graffitti demonstrators. Activists threw graffiti and chanted in protest at government plans to revise the Villa Rosa local plan.
This year, those same activists - and many more, it must be said - are back. But this time, they're camped outside parliament, to protest much broader changes to the foundations of Malta's planning laws.
Robert Abela pulled up a chair and had a chat with demonstrators earlier today.
Robert Abela speaks to protesters outside parliament.Revisiting last year's Budget speech
5.10pm Last year’s Budget speech was mostly focused on that across-the-board income tax cut for all workers. Other notable measures included bigger tax credits for parents with kids in private schools, boosts to pensions and reduced subsidies on electric vehicles.
If you’re keen to refresh your memory, you could do worse than revisit last year’s Budget live blog. And once you've skimmed over that, have a read of this to see how unions, lobbyists and other sectoral interests reacted to it.
Don't expect a traffic miracle
5pm One thing this budget most likely won’t focus on is fixing our growing traffic problem. Traffic has become the country’s biggest headache, with frustration cutting across age groups and social classes.
But it’s clear the government is still some way away from having a clear long-term strategy to fix it: Clyde Caruana worries a big-ticket mass transit system will “royally screw” the country’s finances and Robert Abela acknowledged Caruana has not yet been shown a €2.8 billion metro plan.
What about the PN?
4.53pm The PN did not issue a pre-budget document this year, so it is a bit difficult to gauge what it believes the finance minister should prioritise.
Party leader Alex Borg has made it clear, however, that he'd like to see a focus on family-friendly measures like a four-day work week. On Sunday, he called for a budget with a "social soul".
And here he is today, arguing that a strong economy is about more than just headline figures.
“The real challenge isn’t saying how much the economy has grown, but saying everyone has benefited from this growth,” he says.
Hints about the budget focus
4.50pm Good afternoon, and welcome to this live blog.
We're still hours away from knowing what Budget 2026 has in store, so let's look at the hints we've had in the past days.
Robert Abela said on Sunday that people can expect "massive" incentives for families to be announced tonight. Finance Minister Clyde Caruana made it clear there will be no new taxes and that pensioners can expect a significant increase.
And on Sunday, we revealed two Budget measures we got wind of: a €280 monthy grant for Gozo-based students studying in Malta, and a €500 boost in the one-time grant for the birth or adoption of a child.