Government limits pension tax exemption to pension income only

During the Budget Speech of 27 October 2025, Finance Minister Clyde Caruana announced that pensioners would benefit from a major tax exemption. He stated that pensioners would not pay tax on income equivalent to twice the maximum pension, amounting to around €37,000. This created the clear expectation that pensioners who earn additional income, including from part-time work, rentals, investments or interest, would not pay tax on that income up to that threshold.

Prime Minister Robert Abela reiterated this just one week ago. See attached video.

However, the Government has now published Legal Notice 53 of 2026 , which amends subsidiary legislation under the Income Tax Act. The amendment states:

“Pension income derived in the year immediately preceding the year of assessment 2027 (basis year 2026) and subsequent years, shall be fully exempt from tax up to €37,104.”

This means that the exemption applies only to pension income and does not include other income that pensioners may earn.

Momentum leader Arnold Cassola stated, “The legal amendment makes it clear that the tax exemption only applies to pensionable income. Any other income earned by pensioners, including from work, rentals, investments or interest, will still be taxed.”

Cassola explained that since the maximum pension received by most Maltese pensioners is around €22,000, the exemption up to €37,104 does not translate into additional tax-free income from other sources.

“In practice, this means that the promise that pensioners would not pay tax on additional earnings up to twice the maximum pension has not been implemented in the way it was originally presented by Caruana and reiterated by Abela.

The Prime Minister should stop taking pensioners for a ride”, Cassola said.

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