Reuters Highlights Malta’s New Tax Cuts for Parents In Push To Boost Birth Rate

Reuters has reported that Malta’s 2026 budget includes a series of tax cuts aimed at encouraging parents to have more children, as the government moves to tackle a sharp decline in the island nation’s native birth rate.

Reuter wrote, Finance Minister Clyde Caruana told parliament on Monday that the Mediterranean island’s exceptionally low fertility rate was the “greatest challenge” facing the nation.

“We need to encourage more families to have at least two children,” Caruana said during the presentation of Malta’s 2026 budget at Parliament House in Valletta.

A report by EU statistics agency Eurostat earlier this year revealed that Malta recorded the European Union’s lowest fertility rate in 2023, at just 1.06 children per woman.

Maltese Catholic Archbishop Charles Scicluna warned in September that the country faced the risk of “ethnic extinction”.

Under the new measures, from 2026, each parent with two or more children will be exempt from income tax on the first €18,500 (£15,930) of their earnings. This threshold will increase to €30,000 (£25,830) per parent by 2028. The tax benefit will remain in place until the children reach the age of 23.

The plan mirrors a similar initiative introduced in Poland in September, which eliminates income tax for families with at least two children earning up to €32,973.

Caruana noted earlier this year that Malta’s native population currently stands at around 406,000, with nearly a quarter aged over 65.

Reuters concluded that, in his budget address, Minister Caruana forecast Malta’s economy would grow by 4.1% in real terms in 2026, broadly in line with 2025 projections. He said national debt was expected to remain stable at 47.1% of GDP, while the fiscal deficit was projected to fall to 3.3% of GDP this year and 2.8% the following year.

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