How Much Tax Do I Pay on My Salary in Malaysia?

If you earn a monthly salary in Malaysia, you’ve probably asked yourself, “How much tax am I actually paying?”

Understanding how tax works on your salary can help you manage your finances, claim the right deductions, and make sure you’re not overpaying.
Let’s break down how salary tax in Malaysia is calculated — in simple terms anyone can follow.

How Salary Tax Works in Malaysia

Malaysia uses a progressive tax system, meaning the more you earn, the higher your tax rate — but only on the portion that exceeds each bracket.

You’re taxed on your chargeable income, which is your total annual salary minus approved deductions and reliefs.

You can quickly check your rate using the Malaysia Income Tax Rate Calculator.

Step-by-Step: How to Calculate Tax on Your Salary

Here’s how you can estimate your annual tax:

1. Start with your total annual salary
   Example: RM 5,000 × 12 = RM 60,000
2. Subtract your EPF contributions (9%)
   RM 60,000 – RM 5,400 = RM 54,600
3. Deduct tax reliefs
   Malaysia offers various reliefs like:
   • Self-relief: RM 9,000
   • Lifestyle: RM 2,500
   • EPF + Insurance: up to RM 7,000
   • Spouse or child relief (if applicable)
   Example: RM 54,600 – RM 15,000 (total reliefs) = RM 39,600
4. Apply the correct tax bracket
   Based on the 2025 YA tax structure: 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 70,001 21–30% — So, with RM 39,600 chargeable income, your tax payable is about RM 800–900 for the year.

You can cross-check this estimate using the Salary Tax Calculator Malaysia.

Monthly Tax Deduction (PCB) on Salary

Every month, your employer deducts Potongan Cukai Bulanan (PCB), also known as Monthly Tax Deduction.
This acts as a prepayment towards your annual income tax.

The PCB considers your:

• Salary
• EPF contributions
• Personal and spouse reliefs
• Other deductions declared through Form TP1

At the end of the year, LHDN compares your PCB total vs actual tax — and if you’ve overpaid, you get a tax refund.

Check your monthly deductions easily using the Monthly Tax Deduction Calculator.

Example: Salary Tax Breakdown in Malaysia

Annual Gross Salary	RM 60,000
EPF (9%)	– RM 5,400
Tax Reliefs	– RM 15,000
Chargeable Income	RM 39,600
Annual Tax Payable	~RM 850
Effective Tax Rate	1.4%

This means if you earn RM 5,000 per month, you’ll pay roughly RM 70 per month in tax after all reliefs.
You can verify this with the Malaysia Income Tax Rate Calculator.

What Affects Your Salary Tax in Malaysia

Here are the main factors that change how much tax you owe:

• Annual income: higher income = higher bracket
• Reliefs claimed: the more you claim, the lower your taxable income
• Bonuses or allowances: these are taxable
• Zakat contributions: reduce your tax liability

To see how zakat affects your total tax, try the Malaysia Zakat Calculator.

How to Reduce the Tax on Your Salary

You can’t avoid paying tax, but you can legally reduce it by using available reliefs and planning ahead:

1. Maximize EPF and insurance contributions
2. Claim lifestyle reliefs (books, fitness, digital devices)
3. Contribute to zakat or charitable causes
4. Update your TP1 form with LHDN to reflect your dependents

You can estimate your final tax after all rebates using the Malaysia Tax Rebate Calculator.

Frequently Asked Questions

1. How much tax will I pay on my salary in Malaysia?

It depends on your annual income and reliefs. For most employees earning RM 60,000 per year, the tax is around 1–2% of salary after EPF deductions.

2. What is the minimum income to pay tax in Malaysia?

You need to file taxes if your annual income exceeds RM 34,000 after EPF contributions.

3. Is my bonus included in salary tax?

Yes. Bonuses are part of taxable income and are taxed in the same year they’re received.

4. Do expatriates pay salary tax in Malaysia?

Yes, but at a flat rate of 30% if they are non-residents (less than 182 days in Malaysia).

5. How can I check if I’m overpaying salary tax?

Use the Monthly Tax Deduction Calculator or compare PCB with your final tax via LHDN’s e-Filing portal.