Changes to Tax Exemption on Pension Income for Maltese Residents -
Legal Notice 53 of 2026
The Maltese Government has introduced further amendments to the pension tax exemption framework through Legal Notice 53 of 2026, which amends the Pensions (Tax Exemption) Rules.
These changes introduce a new Rule 4, effective from basis year 2026 (Year of Assessment 2027 onwards), and complete the phased transition towards a full pension exemption regime.
Recap of the Phased Exemption (Basis Years 2022–2025)
In recent years, pensioners benefited from a gradual increase in tax exemption on their pension income, as follows:
- Basis Year 2022 – 20% exemption (capped at €2,864)
- Basis Year 2023 – 40% exemption (capped at €5,987)
- Basis Year 2024 – 60% exemption (capped at €9,327)
- Basis Year 2025 – 80% exemption (capped at €13,309)
This phased approach was designed to progressively reduce the tax burden on pensioners.
Pension Exemption from Basis Year 2026
With effect from 1 January 2026, individuals who previously benefited from the pension exemption will now qualify for a 100% exemption on their pension income, provided that their annual pension does not exceed €37,104.
This represents a significant development, as qualifying pension income will effectively become fully exempt from income tax.
Additional Tax Rebate of up to €540
Importantly, where a pensioner has other chargeable income that results in a tax liability under Malta’s progressive tax rates (ranging from 0% to 35%), the individual may also benefit from a tax rebate of up to €540.
This rebate is set off against the tax due on their remaining chargeable income.
The practical effect is that pensioners who qualify for the exemption will not be disadvantaged if their non-pension income is taxed at standard rates
How We Can Assist
At Tri-Mer Services, our Private Client Tax team is available to review your projected income for basis year 2026 and assess whether you fully qualify for the pension exemption and the additional €540 tax rebate. Given that the overall impact of these changes will depend on your total income position, applicable tax status, and other deductions or credits. A personalised review is strongly recommended. We can guide you through the practical implications of these amendments, ensure accurate reporting in your tax return, and provide strategic advice to optimise your tax position.
Should you wish to discuss how these changes affect you or a family member, we encourage you to contact our team for tailored assistance by pressing the button below.
Ian Mercieca
Partner
Marouska Farrugia
Private Client & Residency Manager
