How to Calculate Malaysia Income Tax for Freelancers (2025 Complete Guide)

Freelancers and gig workers in Malaysia often ask the same question every tax season:
“How do I calculate my income tax if I don’t have a fixed employer?”

Unlike salaried employees who have monthly PCB (Potongan Cukai Bulanan) deductions, freelancers need to report, calculate, and pay taxes on their own.
This guide explains exactly how to do that for YA 2025, with clear steps, examples, and practical tools.

Quick Summary: Freelancer Tax Formula

If you want the short version:

Tax Payable = (Gross Income – Business Expenses – Personal Reliefs) × Applicable Tax Rate

You can use an online Malaysia Income Tax Rate Calculator to run your numbers instantly.

Identify Your Taxable Freelance Income

Your taxable income includes everything you earn through freelance work, whether it’s local clients, gig platforms, or overseas projects.
This covers:

• Project-based work (design, writing, coding, consulting)
• Online gigs and commissions
• Affiliate earnings and digital product sales
• Payments from foreign clients received in Malaysia

Even if clients pay you through PayPal or Wise, that income counts once it reaches a Malaysian account.
If your total annual freelance earnings exceed RM 34,000 (after EPF deductions, if any), you’re required to file a tax return.

Deduct Your Business Expenses

Freelancers are allowed to deduct business-related expenses before calculating tax.
This reduces your chargeable income and your total payable tax.

Common deductible expenses include:

Expense Type	Examples
Office & Equipment	Laptop, printer, phone, camera
Software & Subscriptions	Canva, Adobe, domain hosting
Utilities	Internet, electricity (for home office)
Marketing	Website ads, flyers, social media boosts
Travel	Grab fares, mileage for client visits
Professional Fees	Accountant, tax consultant

Tip: Always keep receipts or invoices. LHDN may request proof if audited.

You can use your records to generate an estimate with the Malaysia Salary Tax Calculator — it works for self-employed income too.

Apply Malaysia’s 2025 Tax Rates

Malaysia uses a progressive tax system, so the more you earn, the higher your tax rate.
Here’s a simplified tax rate table for 2025:

Chargeable Income (RM)	Tax Rate (%)
0 – 5,000	0%
5,001 – 20,000	1%
20,001 – 35,000	3%
35,001 – 50,000	8%
50,001 – 70,000	13%
70,001 – 100,000	21%
100,001 – 250,000	24%
Above 250,000	24.5–30%

Once you know your chargeable income, apply the relevant rate. Using the Malaysia Income Tax Calculator can help employees and freelancers plan their tax payments better.

Claim Your Personal Tax Reliefs

Freelancers can lower taxable income further through personal reliefs.

Some of the most common include:

• Self-relief: RM 9,000
• Lifestyle: RM 2,500 (books, gadgets, sports, etc.)
• Insurance & EPF (voluntary): up to RM 7,000
• Education fees: RM 7,000
• Parents’ care: RM 8,000 combined

For accurate estimates, try the Malaysia Tax Relief Calculator — it helps identify which categories you qualify for.

Compute Your Taxable Amount (Example)

Let’s see how this looks in practice.

Example:

• Total freelance income: RM 90,000
• Deductible expenses: RM 25,000
• Reliefs: RM 12,000

Chargeable income = RM 90,000 – 25,000 – 12,000 = RM 53,000
At this level, you fall under the 13% bracket, so:
Tax Payable ≈ RM 3,800

You can verify this instantly using the Income Tax Calculator Malaysia — it’s designed for freelancers and self-employed Malaysians.

Filing and Payment Process

Freelancers must file taxes using Form B (for self-employed). You can do this via e-Filing on the LHDN MyTax portal.

Key timelines:

• Filing deadline: 30 June 2025
• Payment deadline: same date (if any balance due)

Because freelancers don’t have monthly PCB, you can voluntarily pay installments to avoid large lump-sum payments. Keep a portion (around 10–15%) of your income aside each month.

Zakat and Tax Rebates

If you’ve contributed zakat during the year, you can offset it against your tax payable.
Use the Malaysia Zakat Calculator to calculate how much you can claim as rebate.

Common Mistakes to Avoid

• Mixing personal and business expenses in one account
• Forgetting to declare overseas freelance income
• Not keeping receipts or invoices for claims
• Missing the June filing deadline
• Relying only on last-minute estimates instead of monthly tracking

A simple spreadsheet or accounting app can save hours during tax season.

Frequently Asked Questions

Do freelancers in Malaysia need to pay income tax?

Yes. If your annual net income exceeds RM 34,000, you’re required to file a tax return under Form B.

Which form do freelancers use to file taxes?

Freelancers, gig workers, and self-employed individuals must file Form B, not Form BE (which is for salaried employees).

Are foreign-sourced freelance payments taxable?

If income is remitted to Malaysia, it’s generally taxable. Some temporary exemptions may apply — always check the latest LHDN guidelines.

Can I deduct laptop and internet costs?

Yes, if they’re used for your freelance work. Keep receipts to justify the business use portion.

How can I estimate my tax quickly?

Use free tools like the Malaysia Income Tax Rate Calculator or Tax Relief Calculator for an instant estimate based on 2025 rates.

1. Freelancers should start by checking the official rate tables to identify their correct bracket.
2. Even without a fixed payslip, you must understand what is owed annually based on your total invoices.
3. Keeping track of your revenue helps you accurately assess your liability before the filing deadline.
4. If your business is registered, knowing how to file manually is crucial for compliance.
5. Those with irregular income streams may struggle to predict net earnings without a consistent monthly salary.
6. Self-employed individuals in northern regions are subject to the same national laws as everyone else.
7. Don’t forget to look for general filing tips that apply to both gig workers and permanent staff.