Finance Minister Clyde Caruana said Monday that the untaxable income bracket for the single tax computation is to increase from the first €9,100 to the first €12,000 of a person's income.
Announcing the widening of tax bands, but keeping earnings up to €60,000 being taxed at a maximum of 25%, Caruana said nearly 70% of taxpayers will benefit from a tax reduction of between €435 and €675 per year. People earning an annual salary of over €19,500 are set to enjoy the greatest tax reduction, he said.
He stated that this change is not just beneficial for single taxpayers, but also for married spouses who opt to pay tax individually. In such cases, the tax reduction benefit for that household will be up to double.
The single tax computation is to be amended in a manner where, as of 2025, the first €12,000 of a person's income will not be taxed, a taxation rate of 15% will apply for the income bracket in between €12,001 and €16,000, a 25% rate will apply for the following €16,000-€60,000, while all income over €60,000 is to remain taxed by 35%.
The other tax computations - the married computation and parent calculation - are also to be changed as from 2025.
The married computation - which affects nearly 14% of taxpayers - will increase the threshold of untaxable income from the first €12,700 up to €15,000.
Income in between €15,001 and €23,000 is to be taxed at a rate of 15%, the 25% rate will apply for the range between €23,001 and €60,000, while income above €60,000 for this computation is also to remain taxable by 35%.
Caruana stated that "anyone who pays under this calculation will see a tax reduction in between €345 and €645 annually," with the maximum tax reduction being applicable to those earning over €28,700 per year.
Under the parent computation, the threshold for untaxable income shall also be widened. At the moment, the first €10,500 of a person's income, under this tax calculation, is not taxed; Budget 2025 will see this band be extended to a person's first €13,000.
The next income bracket, featuring a taxation rate of 15%, will range for income between €13,001 and €17,500. The 25% bracket is to be changed for income ranging between €17,501 and €60,000, while all income over €60,000 is to remain taxed by 35%.
Under this calculation, persons paying tax will benefit from a tax reduction of between €375 and €650 annually. Persons earning over €21,200 per year are set to enjoy the maximum reduction tax benefit.
The Finance Minister declared that the government wishes to continue encouraging its labour force to take up an Occupational Pension Plan.
"It is important to ensure a more adequate pensionable income for tomorrow's pensioners," he said, "It is time to fully encourage people to take up Occupational Pension Plans in our country. This is in the interest of the workers to have more sustainable and more adequate pensions."
Minister Caruana stated that the government's ultimate goal is for every employed person or anyone who changes their job to have the opportunity to invest in an occupational pension plan. He added that employers are to be obliged to give their employees the opportunity to join such a plan, even though they are not obliged to contribute themselves.
As an employer itself, the government shall be "committing itself to its employees by paying as much as each individual opts to pay, with a maximum of €100 per month," Caruana described.