If you’re wondering how much income tax you’ll need to pay in Malaysia for 2025, this guide walks you through it step-by-step. Whether you’re a salaried employee, a landlord, a freelancer, or earning bonus income, you’ll learn how to calculate your tax correctly—and how to reduce it legally through reliefs and planning.
What Is Chargeable Income in Malaysia?
In Malaysia, you’re taxed on your chargeable income—not your total income.
Chargeable income = Gross income – Tax reliefs – Deductions
That includes your annual salary, bonuses, commissions, rental income, and other earnings. After applying allowable deductions, you end up with the figure used to determine your tax bracket.
Malaysia Income Tax Brackets for 2025
These are the individual income tax rates for tax-residents in 2025:
| Chargeable Income (RM) | Tax Rate (%) |
|---|---|
| 0 – 5,000 | 0% |
| 5,001 – 20,000 | 1% |
| 20,001 – 35,000 | 3% |
| 35,001 – 50,000 | 6% |
| 50,001 – 70,000 | 11% |
| 70,001 – 100,000 | 19% |
| 100,001 – 400,000 | 25% |
| 400,001 – 600,000 | 26% |
| 600,001 – 2,000,000 | 28% |
| Over 2,000,000 | 30% |
Non-residents are taxed at a flat 30% with no reliefs.
Step-by-Step: How to Calculate Your Income Tax in 2025
Here’s the basic process:
1. Add Up Your Total Income
Include:
- Annual salary
- Bonuses and commissions
- Rental income
- Freelance or side income
If you want a fast and accurate tax estimate, try using the Malaysia Income Tax Calculator.
2. Apply Relevant Reliefs and Deductions
Some common tax reliefs include:
- EPF and life insurance (combined limit: RM7,000)
- SOCSO and EIS
- Lifestyle expenses (books, electronics, fitness)
- Medical expenses for parents
- Education and self-improvement
You can check how much you can deduct with our relief calculator.
3. Determine Your Chargeable Income
Subtract your reliefs from your gross income. The result is your chargeable income, which determines the tax rate you’ll fall under.
4. Apply the Tax Rates
Use the tax bracket table above to compute the tax owed on each portion of your income. Malaysia’s system is progressive—you only pay higher tax on the income in each higher band.
Example: Tax Calculation for RM90,000 Income
- Total income: RM90,000
- Claimed reliefs: RM15,000
- Chargeable income: RM75,000
Using progressive rates:
- RM5,000 × 0% = RM0
- RM15,000 × 1% = RM150
- RM15,000 × 3% = RM450
- RM15,000 × 6% = RM900
- RM15,000 × 11% = RM1,650
- RM10,000 × 19% = RM1,900
Estimated tax payable = RM5,050
You can automate this using our salary tax calculator.
What About Bonus, Rental, and Other Income?
Bonus and Commission
Bonuses are added to your total annual income and taxed at your marginal rate. They can bump you into a higher tax bracket.
Use our bonus tax tool to estimate how much tax applies.
Rental Income
Rental earnings are taxable after deducting eligible expenses like:
- Maintenance
- Property agent fees
- Fire insurance
- Quit rent and assessment
You can estimate tax on this using our rental income calculator.
What Is PCB (Monthly Tax Deduction)?
If you’re an employee, your employer likely deducts income tax monthly through the PCB system (Potongan Cukai Bulanan). This is paid directly to LHDN.
To check whether your monthly deductions are accurate, use our monthly deduction tool.
Can You Get a Refund?
Yes. If your PCB deductions exceed your actual tax payable (after reliefs), you’re entitled to a refund from LHDN. This typically happens after you file via e-Filing.
Check if you’re eligible using our refund calculator (coming soon).
Frequently Asked Questions
Do I need to pay tax if I earn less than RM34,000?
If your chargeable income is below the threshold, and you qualify for reliefs, you may not owe tax. But you still need to file if you meet LHDN criteria.
How does EPF affect my tax?
Your contributions are deductible up to RM4,000. It lowers your chargeable income.
Can I include rental income when calculating tax?
Yes. It’s taxable after deducting allowable expenses.
Are bonuses taxed separately?
No. They’re added to your total income and taxed at your marginal rate.
How do I check if my employer deducted enough tax?
Compare your PCB (shown on your payslip) against the estimate using a calculator.
- To understand the fundamentals before running any numbers, start with our clear breakdown of how to calculate your Malaysia income tax.
- For an instant, practical estimate, you can apply the rules explained here using the Malaysia salary tax calculator.
- Since tax bands change over time, it’s essential to reference the latest Malaysia income tax rates for 2025 when doing your calculations.
- If your monthly deductions seem off, this guide pairs well with checking your figures using the monthly tax deduction (PCB) calculator.
- To reduce your final tax payable legally, review the eligible deductions explained alongside the Malaysia tax relief calculator.
- Employees receiving variable income should also factor in bonuses separately, which is why our Malaysia bonus tax calculator is useful here.
- After completing your annual filing, you can estimate whether you’re owed money back by checking the Malaysia tax refund calculator.
Willium is the creator of IncomeTaxCalculatorMalaysia.com, a trusted resource for accurate and easy-to-use tax calculation tools. With a deep understanding of Malaysia’s tax system, he helps individuals and businesses estimate their income tax with confidence. Willium is dedicated to simplifying financial decisions by offering clear, reliable tools and expert guidance, empowering users to stay informed and save time.