Explained: How your income tax brackets will change in 2025

In one fell swoop, the government will widen the income tax bands in 2025, with workers expecting to save between €345 and €675.

In a major boost to disposable income, the government is effectively cutting income tax by adjusting the tax bands in the three tax categories – single, married and parent.

Those paying income tax at the single rate will not pay any tax on the first €12,000 earned. In the married and parent rates, the first €15,000 and €13,000 earned respectively will not be taxed.

The 15% band will widen to €12,001-€16,000 at the single rate, €15,001-€23,000 at the married rate, and €13,001-17,500 at the parent rate.

Lastly, the 25% will be calculated on the amounts earned up to €60,000, after which point a 35% tax rate will apply.

The income tax cuts are more than what was promised in the Labour Party’s 2022 manifesto. The party had, at the time, quantified the tax cuts at €60 million. The Budget 2025 cuts will cost the government €140 million.

A €40m injection between 2013 and 2015

The last tax cut happened in 2013 when the top income tax rate was cut from 35% to 25% over a three-year span for those earning below €60,000. The measure left more than €40 million in people’s pockets.

The tax cut had been planned by the outgoing Nationalist administration, but it never got the chance to implement the measure because Budget 2013 was defeated in parliament precipitating an election.

The incoming PL government held an emergency budget and chose to retain the tax cut pledge even though it was not part of its electoral manifesto.

Check out MaltaToday’s salary calculator online to find out how the tax cuts will impact you.