How Much Is Malaysia Tax on My Bonus? (2025 Employee Guide)

Most Malaysians look forward to their annual bonus, but few realize how it affects their income tax.
Bonuses are fully taxable in Malaysia — they are treated as part of your total annual income and taxed according to your personal income tax rate.

This guide explains how much tax you’ll pay on your bonus, how to estimate it, and how you can plan ahead to reduce the impact. Landlords usually compare their rent income with the Malaysia Rental Income Tax Calculator to know their obligations.

Is My Bonus Taxable in Malaysia?

Yes. Under Malaysia’s Income Tax Act 1967, any bonus you receive from your employer — whether performance-based, annual, or contractual — is part of your employment income.
That means your bonus tax rate depends on your total income, including salary, allowances, and benefits.

So, if your annual income (including the bonus) pushes you into a higher bracket, you’ll pay a higher marginal tax rate on the bonus portion.

You can check your applicable rate with the Malaysia Income Tax Rate Calculator.

How the Bonus Tax Works in Malaysia

When your employer pays your bonus, two main things happen:

1. EPF Contribution (9%) – Your bonus is subject to the same EPF deduction as your salary.
2. PCB Deduction (Monthly Tax Deduction) – LHDN requires employers to adjust PCB for the month you receive your bonus. This ensures tax is withheld upfront.

The bonus amount is added to your total taxable income for that year. During your annual tax filing, LHDN recalculates your actual tax liability — if you’ve overpaid through PCB, you’ll get a tax refund.

You can estimate this refund using the Malaysia Tax Rebate Calculator.

Step-by-Step: How to Estimate Tax on Your Bonus

Here’s a simple way to calculate how much of your bonus goes to tax.

Step 1: Add Bonus to Your Annual Income

Let’s say your salary is RM 5,000 per month and you receive a RM 10,000 bonus.

Total annual income = (RM 5,000 × 12) + RM 10,000 = RM 70,000

Step 2: Subtract EPF and Reliefs

Deduct your EPF contribution (9%) and personal reliefs such as self, lifestyle, and insurance.

EPF: RM 70,000 × 9% = RM 6,300
Taxable income = RM 63,700 – RM 15,000 (reliefs) = RM 48,700

Step 3: Apply Malaysia’s Income Tax Rates

Chargeable Income (RM)	Tax Rate (%)	Tax Payable (RM)
0 – 5,000	0%	0
5,001 – 20,000	1%	150
20,001 – 35,000	3%	450
35,001 – 50,000	8%	1,200
50,001 – 70,000	13%	2,600
Above 70,000	21%–30%	—

Your estimated annual tax is roughly RM 1,800, and your bonus contributed about RM 700 of that amount.

You can test other income levels using the Malaysia Salary Tax Calculator.

Example: Bonus Tax Breakdown (Resident Employee)

Details	Amount (RM)
Monthly Salary	5,000
Annual Bonus	10,000
EPF (9%)	-6,300
Reliefs	-15,000
Chargeable Income	48,700
Annual Tax Payable	1,800
Effective Tax on Bonus (Approx.)	7–10%

If your annual income is higher, the marginal tax rate on your bonus can reach 13%–21%, depending on your bracket. When reviewing your payslip, the Malaysia Income Tax Calculator helps you confirm the correct tax has been deducted.

PCB Deduction on Bonus Month

When you receive your bonus, your PCB (Potongan Cukai Bulanan) for that month will temporarily increase.
Employers use LHDN’s official PCB formula to calculate the deduction, considering your bonus as “additional wages.”

That means your payslip for the bonus month might show a much higher deduction, but it balances out during annual filing.

To estimate how much PCB is withheld from your bonus, try the Malaysia Monthly Tax Deduction Calculator.

Can You Reduce Tax on Your Bonus?

Yes — while you can’t exempt the bonus itself, you can offset the taxable amount with legitimate reliefs and contributions.

Here’s how:

• Maximize EPF & life insurance contributions (up to RM 7,000 relief).
• Claim lifestyle deductions (laptops, books, gym membership — up to RM 2,500).
• Contribute to Zakat, which directly reduces your income tax. You can calculate this using the Malaysia Zakat Calculator.

These steps don’t reduce your PCB immediately but help during your annual e-Filing review.

Typical Bonus Scenarios (2025 Estimates)

Annual Salary (RM)	Bonus (RM)	Approx. Tax Rate	Estimated Tax (RM)	Net Bonus (RM)
60,000	6,000	8%	480	5,520
100,000	10,000	13%	1,300	8,700
150,000	15,000	21%	3,150	11,850

The higher your income bracket, the greater the marginal rate on your bonus. Employees often cross-check their monthly tax using the Malaysia Salary Tax Calculator for accuracy.

Frequently Asked Questions

1. Are bonuses taxed at a higher rate in Malaysia?

No. Bonuses are taxed at your regular marginal rate, not a special higher rate.

2. Does the bonus push me into a new tax bracket?

Yes — if your bonus raises your total income above a bracket threshold, the excess is taxed at the higher rate.

3. Is EPF deducted from my bonus?

Yes, the 9% employee EPF contribution applies to bonuses as well.

4. Will I get a refund if too much tax is deducted from my bonus?

Yes. If your PCB deductions exceed your final annual tax, LHDN will refund the difference.

5. Are non-residents taxed differently on bonuses?

Yes. Non-residents pay a flat 30% tax on Malaysian-sourced income, including bonuses.

1. The sudden spike in your monthly PCB amount is usually caused by the formula applied to lump-sum payments.
2. Receiving a large payout can easily push you into a higher 2025 tax bracket, significantly increasing your rate.
3. You should use a digital computation tool to see exactly how the extra cash changes your final numbers.
4. Don’t forget that mandatory retirement savings are also deducted from your performance incentive.
5. If the deduction was too high, you might be eligible for a future reimbursement after filing your return.
6. Understanding the basic levy on wages helps explain why your net bonus is lower than expected.
7. For a broader view of your finances, check our comprehensive assessment guide for this year.