Malta Plans €160 Million Tax Cuts to Support 68,000 Families Amid Low Birth Rate

Malta is implementing significant tax cuts for parents, particularly those with two or more children, to combat the country's record-low fertility rate and demographic decline. Finance Minister Clyde Caruana announced that starting in 2026, parents of two or more children will be exempt from paying income tax on the first €18,500 they earn, rising to €30,000 by 2028, with benefits continuing until children are 18 or 23 if in education. This policy, expected to cost around €160 million annually and benefit approximately 68,000 families, aims to encourage larger families and alleviate financial burdens, effectively allowing parents more time flexibility and indirectly supporting expenses like home loans. The initiative aligns with broader European trends, following similar tax incentives in countries such as Poland, and addresses warnings from Maltese leaders about the risk of ethnic extinction due to low fertility. Prime Minister Robert Abela described the reform as historic, marking the first time many middle-class families in Malta will pay no income tax. Economic projections suggest Malta will maintain steady GDP growth and fiscal stability alongside these demographic policies.