Malaysia Personal Income Tax Guide 2026

Overview — Inland Revenue Board (LHDN / HASiL)

The Inland Revenue Board of Malaysia (LHDN, now branded HASiL) administers all direct taxes. Every resident is assigned a tax identification number (TIN) upon registration. Malaysia operates a self-assessment system where taxpayers compute their own tax liability. The tax year runs from 1 January to 31 December, with the annual return (Borang BE for employees, Borang B for self-employed) due by 30 April (e-Filing: 15 May) of the following year. Global income of Malaysian tax residents is subject to IIT. Non-residents are taxed only on Malaysian-source income at a flat 30% rate on employment income.

Individual Income Tax Brackets (2026)

The IIT uses a progressive rate structure with eleven brackets. Rates apply to chargeable income (pendapatan bercukai) after all reliefs and deductions:

• Up to MYR 5,000: 0%
• MYR 5,001 to 20,000: 1%
• MYR 20,001 to 35,000: 3%
• MYR 35,001 to 50,000: 8%
• MYR 50,001 to 70,000: 14%
• MYR 70,001 to 100,000: 21%
• MYR 100,001 to 250,000: 24%
• MYR 250,001 to 400,000: 25%
• MYR 400,001 to 600,000: 26%
• MYR 600,001 to 2,000,000: 28%
• Above MYR 2,000,000: 30%

Non-residents pay a flat 30% on employment income (no personal reliefs), except for certain reduced rates under tax treaties.

Personal Reliefs (Pelepasan Peribadi)

Malaysia offers generous personal reliefs to reduce chargeable income:

• Self relief: MYR 9,000 automatic deduction for every individual
• EPF relief: Up to MYR 4,000 (employee contributions to Employees Provident Fund)
• Life insurance & EPF (combined): Up to MYR 3,000 for life insurance premiums (plus the separate MYR 4,000 EPF relief)
• Education fees: Up to MYR 7,000 for qualifying courses at recognised institutions
• Medical expenses: Up to MYR 10,000 for serious diseases (self, spouse, child), with additional limits for medical check-ups (MYR 500) and dental (MYR 500)
• Lifestyle relief: Up to MYR 2,500 for books, computers, sports equipment, internet, and gym membership
• Childcare relief: Up to MYR 3,000 per child for registered childcare centres

Spouse and Dependent Reliefs

Spouse relief (Pelepasan Suami/Isteri): MYR 4,000 if the spouse has no income or has elected to file separately. Additional MYR 5,000 relief is available for a disabled spouse.

Child relief (Pelepasan Anak): MYR 2,000 per unmarried child under 18. For children 18+ in full-time education (diploma/degree or above): MYR 8,000 per child. For disabled children: additional MYR 6,000.

Life insurance relief for children: Education and medical insurance premiums for children qualify for relief up to MYR 3,000 (combined with the taxpayer's own insurance limit).

Dependent relief: Up to MYR 8,000 for each dependent parent (mother or father) on medical, dental, and care expenses.

Zakat Deduction (Potongan Zakat)

Zakat (tithe) paid to Lembaga Zakat or approved state religious authorities is fully deductible against income tax. This is a direct deduction from tax payable (not from income), making it particularly valuable. Zakat paid civil servants via salary deduction (potongan gaji) is automatically credited. To claim, retain the official zakat receipt (bil zakat) issued by the authorised collector. The zakat deduction can offset up to 100% of the tax payable, but any excess zakat paid cannot be refunded.

PCB — Monthly Tax Deduction (Potongan Cukai Bulanan)

Employers are required to deduct PCB from employees' monthly salaries based on LHDN's scheduled deduction tables. The PCB system aims to approximate the employee's total annual tax liability, so most employees have little or no balance due at year-end. At the end of the year, employees file Borang BE to reconcile actual tax liability with PCB deducted. Overpayments are refunded; shortfalls must be paid by 30 April (or 15 May for e-Filing). PCB rates are calculated using the Net Method (after EPF deduction, typically 11% of salary).

Additional Deductions and Tax Reliefs

SSPN relief: Up to MYR 8,000 for contributions to the National Education Savings Scheme (SSPN) for children's education.

PRS relief: Up to MYR 3,000 for contributions to Private Retirement Schemes (PRS).

Deferred annuity relief: Up to MYR 3,000 for deferred annuity premiums.

Housing loan interest: Up to MYR 10,000 (for 3 consecutive years) on interest paid for a first residential home purchase (subject to conditions).

EV charging relief: Up to MYR 2,500 for electric vehicle charging facilities.

Total combined relief for EPF, life insurance, education insurance, and deferred annuity: capped at MYR 7,000 (excluding the separate MYR 4,000 EPF deduction under the self relief category).

FAQs

Do I need to file a tax return if my income is below the threshold?

If your annual employment income is below MYR 34,000 (after EPF deduction) and you have no other income, you generally do not need to file. However, if tax was deducted (PCB) from your salary, you must file to claim a refund.

How does the spouse relief work for dual-income couples?

If both spouses have income, only one can claim the MYR 4,000 spouse relief. The spouse must have no income or have no total income (after exemptions). Couples typically elect the more beneficial arrangement.

Can I claim relief for my parents if they have their own income?

The parent relief (MYR 8,000 per parent) is for medical and care expenses. It is not dependent on the parent's income status, but you must be able to substantiate the expenses with receipts.

How does zakat interact with income tax?

Zakat paid is deducted directly from the tax payable (not from income). For example, if your tax payable is MYR 5,000 and you paid MYR 2,000 in zakat, you only pay MYR 3,000 to LHDN. Zakat cannot exceed the tax payable.

Disclaimer

This guide provides general information about Malaysian personal income tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified tax advisor or LHDN (HASiL) directly for advice specific to your situation. InvestmentKit does not provide tax advice.