How Much Tax Do I Pay in Penang?

If you live or work in Penang, you’re probably wondering how much income tax you actually need to pay each year.
The short answer: Penang follows Malaysia’s federal income tax system, so your tax rate is the same as in Kuala Lumpur, Johor, or any other state.

There’s no separate Penang state income tax — everything is governed by Lembaga Hasil Dalam Negeri (LHDN), Malaysia’s national tax authority.

This guide explains how much tax you pay in Penang, how to estimate your yearly amount, and what deductions can help reduce your bill.

Understanding How Income Tax Works in Penang

In Malaysia, income tax is federal, not state-based.
That means Penang residents pay income tax according to the same progressive rate system used across the country.

Whether you’re a salaried employee, freelancer, or business owner, your tax is based on your total annual income minus allowable reliefs and deductions.

Quick Facts:

• Authority: LHDN (Inland Revenue Board of Malaysia)
• Form type: BE (for employees) or B (for self-employed)
• Filing deadline: April 30 (Form BE) or June 30 (Form B)
• Tax year: January 1 – December 31

If you’re unsure about your exact bracket, you can use the Malaysia Income Tax Rate Calculator to check your estimated tax.

Income Tax Rates for Penang Residents (YA 2025)

The same progressive tax rates apply nationwide. Here’s the current structure for resident individuals:

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
70,001 – 100,000	21%	6,300
100,001 – 250,000	24%	—
250,001 – 400,000	24.5%	—
400,001 – 600,000	25%	—
600,001 – 1,000,000	26%	—
Above 1,000,000	28%	—

If your income exceeds RM 70,000 per year, your tax rate typically falls between 13% and 21%, depending on your deductions. Many people use the Malaysia Income Tax Calculator to compare their tax before and after salary adjustments.

Example: How to Calculate Tax in Penang

Let’s say you work in George Town, Penang, earning a monthly salary of RM 6,000 with a small annual bonus of RM 5,000.

Description	Amount (RM)
Annual salary	72,000
Bonus	5,000
Total income	77,000
Less: Reliefs (personal, EPF, insurance, lifestyle, etc.)	25,000
Chargeable income	52,000
Tax payable	RM 2,920
Less: Monthly PCB (MTD) deducted	RM 3,200
Tax refund due	RM 280

So, you’d expect to receive about RM 280 back as a tax refund when you file your e-Filing return.

You can verify this with the Malaysia Tax Refund Calculator for a more precise estimate.

Do Penang Residents Pay Any Extra Local Taxes?

No — there’s no additional “state tax” in Penang.
All income tax goes to the federal government, not the Penang State Government.

However, as a Penang resident, you may still pay:

• Cukai Taksiran (Assessment Tax): Local property tax managed by the Penang Island City Council (MBPP) or Seberang Perai City Council (MBSP).
• Cukai Tanah (Quit Rent): Annual land ownership fee (for landed property owners).
• SST (Sales & Service Tax): On applicable goods and services (nationwide).

These are separate from your income tax.

What Deductions and Reliefs Can Penang Taxpayers Claim?

Tax reliefs can significantly reduce your chargeable income. Here are some of the most common ones for Malaysians:

Category	Relief Limit (RM)
Individual	9,000
EPF & Life Insurance	7,000
SOCSO + EIS	350
Lifestyle (books, electronics, internet)	2,500
Medical (self & parents)	10,000
Spouse	4,000
Child (under 18)	2,000

Use the Malaysia Tax Relief Calculator to see which deductions apply to you.

Tax for Self-Employed and Freelancers in Penang

If you’re self-employed or run a business in Penang, you’ll file using Form B instead of Form BE.

Your tax is based on net profit (income – business expenses).

Example:

Item	Amount (RM)
Gross income	90,000
Business expenses	15,000
Net profit	75,000
Reliefs	20,000
Chargeable income	55,000
Tax payable	RM 3,170 (approx.)

For a deeper look at this, read How to Estimate Malaysia Taxes for Self-Employed.

Take-Home Pay in Penang After Tax

Here’s a snapshot of typical take-home pay after tax for Penang residents:

Gross Annual Income (RM)	Approx. Tax (RM)	Take-Home Pay (RM)
40,000	350	39,650
60,000	2,000	58,000
80,000	4,500	75,500
100,000	8,000	92,000
150,000	18,000	132,000

This assumes standard reliefs and no dependents.
You can refine your figures with the Malaysia Salary Tax Calculator.

Filing and Paying Taxes in Penang

Step-by-Step Filing Process:

1. Log in to MyTax Portal (ez.hasil.gov.my).
2. Select e-Filing → Form BE (employees) or Form B (self-employed).
3. Declare your income and reliefs.
4. Submit and wait for your acknowledgment receipt (CP21).
5. If eligible, your tax refund is credited within 30 working days.

Key Deadlines:

Category	Form	Deadline
Employees	BE	30 April 2025
Self-Employed	B	30 June 2025

Frequently Asked Questions

1. Is there a separate state tax in Penang?
No. Penang follows Malaysia’s federal income tax system — no extra state tax is imposed.

2. How much income tax will I pay if I earn RM 80,000 in Penang?
Approximately RM 4,500 after standard reliefs.

3. Are property taxes included in income tax?
No, property-related taxes like assessment tax and quit rent are separate local taxes.

4. Do self-employed individuals in Penang pay more tax?
Not necessarily — it depends on your net profit and eligible deductions.

5. When will I get my tax refund after filing?
Usually within 30 working days of e-Filing if all details are correct.

• To understand how Penang residents are taxed under the national system, it’s helpful to begin with how much income tax you pay in Malaysia.
• Since state location does not change federal tax rules, you can estimate your liability accurately using the main Malaysia income tax calculator.
• Applying the correct tax brackets is essential, so this guide should be read alongside the latest Malaysia income tax rate for 2025.
• Salaried employees in Penang should also factor in employer deductions by reviewing figures with the monthly tax deduction (PCB) calculator.
• To legally reduce your tax payable, it’s important to account for deductions explained through the Malaysia tax relief calculator.
• If your income includes bonuses or variable pay, these amounts should be assessed separately using the Malaysia bonus tax calculator.
• After filing your return, you can estimate whether you are due a refund or need to pay more by checking the Malaysia tax refund calculator.