How much income tax do I pay in Malaysia?

Understanding your income tax in Malaysia is essential for proper financial planning. The amount you pay depends on two main factors: your tax residency status and your chargeable income. For most people, Malaysia’s progressive tax system means the more you earn, the higher your tax rate.

Determine Your Tax Residency

Your tax status is the most important factor in calculating your tax.

• Resident Individual: You are a resident if you were in Malaysia for 182 days or more in a calendar year. Residents benefit from lower, progressive tax rates and can claim various tax reliefs to reduce their taxable income.
• Non-Resident Individual: You are a non-resident if you were in Malaysia for less than 182 days. You are subject to a flat tax rate of 30% on income earned here and cannot claim personal reliefs.

How to Calculate Your Income Tax (for Residents)

Here’s how to calculate your income tax step-by-step.

Step A: Find Your Total Annual Income

This includes all income from your job (salary, bonuses, allowances), business, and other sources like rental income.

Step B: Subtract Tax Reliefs and Deductions

This is the most critical step to lower your tax bill. Tax reliefs are specific expenses you can deduct from your total income. Common reliefs for the Year of Assessment 2025 include:

• Self-Relief: RM 9,000 (every resident can claim this)
• EPF & SOCSO Contributions: Up to RM 4,000 for EPF and RM 350 for SOCSO.
• Lifestyle Relief: Up to RM 2,500 for things like books, gym memberships, smartphones, and internet bills.
• Medical & Education: Specific reliefs for medical expenses for parents and education fees for yourself or your children.
• Spouse and Child: Reliefs for your spouse and dependent children.

By subtracting these reliefs from your total income, you get your Chargeable Income.

Step C: Apply the Progressive Tax Rate

Your chargeable income is then taxed according to these rates for the Year of Assessment 2025:

Chargeable Income (RM)	Calculation (RM)	Rate (%)	Tax (RM)
0 – 5,000	First 5,000	0	0
5,001 – 20,000	Next 15,000	1	150
20,001 – 35,000	Next 15,000	3	450
35,001 – 50,000	Next 15,000	6	900
50,001 – 70,000	Next 20,000	11	2,200
70,001 – 100,000	Next 30,000	19	5,700
100,001 – 400,000	Next 300,000	25	75,000
400,001 – 600,000	Next 200,000	26	52,000
600,001 – 2,000,000	Next 1,400,000	28	392,000
Exceeding 2,000,000	Remainder	30	…

Step D: Apply Rebates (if any)

After calculating your tax, you may be eligible for a rebate that directly reduces your tax payable. For example, if your chargeable income is RM35,000 or less, you get a RM 400 tax rebate.

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Practical Examples

Scenario 1: You’re a new graduate earning RM 4,000 per month.

• Annual Income: RM 48,000
• Total Reliefs: RM 9,000 (Self) + RM 4,000 (EPF) = RM 13,000
• Chargeable Income: RM 48,000 – RM 13,000 = RM 35,000
• Tax Calculation: Tax on the first RM 35,000 is RM 600.
• Tax Rebate: Since your chargeable income is RM 35,000, you are eligible for a RM 400 rebate.
• Final Tax Payable: RM 600 – RM 400 = RM 200.

Scenario 2: You’re an experienced professional earning RM 10,000 per month.

• Annual Income: RM 120,000
• Total Reliefs: RM 9,000 (Self) + RM 4,000 (EPF) + RM 2,500 (Lifestyle) = RM 15,500
• Chargeable Income: RM 120,000 – RM 15,500 = RM 104,500
• Tax Calculation: Tax on the first RM 100,000 is RM 9,400.
  • The remaining RM 4,500 is taxed at 25% (RM 1,125).
• Final Tax Payable: RM 9,400 + RM 1,125 = RM 10,525.

Frequently Asked Questions (FAQ)

How to file my income tax in Malaysia?

You can file your taxes online through the Inland Revenue Board of Malaysia (LHDN) MyTax Portal using e-Filing. It’s a user-friendly system where most of your income data is pre-filled, making the process faster and more accurate.

What is the minimum income to pay tax in Malaysia?

You are legally required to file a tax return if your annual income exceeds RM 37,333 (after EPF deductions). However, you only start paying tax when your chargeable income is above RM 5,000.

Can a non-resident be taxed at a lower rate?

Generally, non-residents are taxed at a flat 30% rate. However, some exceptions apply, such as for approved “knowledge workers” in specific economic zones like Iskandar Malaysia, who may be taxed at a flat 15% rate on employment income.

What is Monthly Tax Deduction (MTD) or PCB?

MTD (Potongan Cukai Bulanan or PCB) is a mandatory system where employers deduct a portion of your salary each month for tax purposes. When you file your annual return, this amount is reconciled, and you either receive a refund or pay the balance.

How do I check my income tax status or refund?

You can check your income tax account status and any tax refunds by logging into the LHDN MyTax Portal. Refunds are typically processed and deposited into your bank account within 30 working days of filing.