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- Complete Guide on How to Pay Lesser Income Tax in Malaysia (2026)
Complete Guide on How to Pay Lesser Income Tax in Malaysia (2026)
Your complete guide on how to pay lesser personal income tax in 2026, using tax reliefs, tax rebates, tax deductions and tax exemptions!
DoitDuit | Your Investing Friend
October 15, 2026
Malaysia Income Tax System
In Malaysia, the income tax system operates on a Self Assessment System (SAS), where taxpayers are responsible for:
Determining their taxable income;
Calculating how much tax they need to pay;
Submitting their tax return form; and
Making tax payments.
Malaysia's income tax system is a progressive tax tier system. This means that the higher your income, the more you need to pay tax. It also means that you dont pay a flat rate on your entire income.
Chargeable Income (RM) | Calculation (RM) | Rate % | Tax (RM) |
0 – 5,000 | On the First 5000 | 0 | 0 |
5,001 – 20,000 | On the First 5000 | 1 | 0 |
20,001 – 35,000 | On the First 20,000 | 3 | 150 |
35,001 – 50,000 | On the First 35,000 | 6 | 600 |
50,001 – 70,000 | On the First 50,000 | 11 | 1,500 |
70,001 – 100,000 | On the First 70,000 | 19 | 3,700 |
100,001 – 400,000 | On the First 100,000 | 25 | 9,400 |
400,001 – 600,000 | On the First 400,000 | 26 | 84,400 |
600,001 – 2,000,000 | On the First 600,000 | 28 | 136,400 |
Exceeding 2,000,000 | On the First 2,000,000 | 30 | 528,400 |
For example, if your taxable income is RM60,000 (RM5,000/month), then you are paying your income tax as below:
Tier | Rate | Tax |
|---|---|---|
RM0-5,000 | 0% | RM0 |
RM5,001-20,000 | 1% | RM150 |
RM20,001-35,000 | 3% | RM450 |
RM35,001-50,000 | 6% | RM900 |
RM50,001-60,000 | 11% | RM1,100 |
Total tax payable | RM2,600 (4.3% of your RM60,000 taxable income) |
Who needs to pay tax
Only tax residents of Malaysia can enjoy all the tax benefits as below. You are considered as tax resident if you meet ANY of the following conditions:
In Malaysia for at least 182 days in a calendar year;
In Malaysia for a period of <182 days during the year but that period is linked to a period of physical presence of 182 or more consecutive days in the following or preceding year. Temporary absences from Malaysia due to the following reasons are counted as part of the consecutive days, provided that the individual is in Malaysia before and after each temporary absence:
business trips
treatment for ill-health
social visits not exceeding 14 days
In Malaysia for 90 days or more during the year and, in any 3 of the 4 immediately preceding years, you are in Malaysia for at least 90 days or was resident in Malaysia; or
Resident for the year immediately following that year and for each of the 3 immediately preceding years.
How to pay lesser tax
LHDN Malaysia provides 4 ways for Malaysians to legally reduce the tax you need to pay:
Type | How it works | Example |
|---|---|---|
Tax exemption | Income that is not subjected to tax, so it does not count towards your aggregate income | Petrol or travel allowances (up to RM6,000); Childcare allowance (up to RM3,000); Parking allowance; Meal allowance etc Complete list of perquisites & benefits-in-kind: https://tr.ee/pzsuhG |
Tax deduction | Reduce the amount of your aggregate income, so your taxable income will be lower | Donations to approved organisations; Subscription fees for professional bodies Complete list of approved organisation: https://www.hasil.gov.my/en/quick-links/services/donation-approval/ |
Tax rebate | Tax rebate is applied after your tax payable has been calculated, so it directly reduces how much tax you need to pay | RM400 tax rebate if your taxable income is RM35,000 or less |
Tax relief | Expenses that can be deducted from your aggregate income, so your taxable income is lower | Refer to section below |
Tax Reliefs for 2026
Tax reliefs are for you to deduct your aggregate income so that you have lower taxable income and pay lesser tax. It is not a 1-to-1 refund.
In short, tax reliefs reduce yoru chargeable income, so you pay less tax. RM1,000 of relief saves you RM110 at an 11% marginal rate.
Note that you can only claim what you paid for tax reliefs, and not the maximum amount. To claim tax reliefs, you must need to keep the receipts for 7 years, and it needs to be under your name, because LHDN might audit you.
4 main categories of tax reliefs:
Core Individual & Contributions
Tax Relief | Amount |
|---|---|
Individual | RM9,000 |
Education (tertiary/postgrad) | RM7,000 |
Upskilling course | RM2,000 (within the RM7,000 education limit) |
Disabled individual | Additional RM7,000 |
Housing loans interest for first-time homeowners | i) RM7,000 if house price <RM500k ii) RM5,000 if house price between RM500k-RM750k |
Family
Tax Relief | Amount |
|---|---|
Spouse / Alimony | RM4,000 |
Disabled spouse | RM6,000 |
Medical expenses for parents and grandparents (treatment, special needs or care expenses) | RM8,000 (medical examination up to RM1,000) |
Unmarried child relief | i) RM2,000 if child below 18 y.o. ii) RM2,000 if child 18 y.o. and above but still studying full time iii) RM8,000 if child 18 y.o. and above but still studying tertiary education |
Breastfeeding equipment (child <2 y.o. and only apply for working women) | RM1,000 (claim once every 2 years only) |
Childcare center / kindergarden / day care (child <12 y.o.) | RM3,000 (one parent claim only) |
SSPN | RM8,000 (one parent claim only) |
Disabled child | i) RM8,000 for unmarried disabled child ii) Additional RM8,000 for >18 y.o. disabled child studying higher education |
Basic supporting equipment for disabled self, spouse, child or parents | RM6,000 |
Lifestyle
Tax Relief | Amount |
|---|---|
Sports equipment (including entry fees for sports facilities, registration fees for sports competition, gym membership, sports training fees) | RM1,000 |
Lifestyle (reading materials, computer & smartphone, broadband, self skill enhancement courses) | RM2,500 |
EV charging facilities, food waste composting machines, home CCTV | RM2,500 |
Domestic attractions & cultural arts programme entrance fees | RM1,000 (exclude hotels, flights and meals) |
Medical, Insurance, PRS, EPF, SOCSO
Tax Relief | Amount |
|---|---|
Medical expenses for self, spouse or child | RM10,000 - Serious disease - Fertility treatment - Vaccination (max RM1,000 sublimit) - Dental examination & treatment (max RM1,000 sublimit) - Medical examination (max RM1,000 sublimit) - Covid test (max RM1,000 sublimit) - Mental health examination (max RM1,000 sublimit) - Assessment of intellectual disability (max RM10,000 sublimit) - Early intervention program (max RM10,000 sublimit) |
Life insurance premiums / EPF voluntary contributions for self /spouse / children | RM3,000 |
Education or medical insurance premium | RM4,000 |
SOCSO & EIS | RM350 |
EPF contributions (mandatory/ voluntary) | RM4,000 |
PRS | RM3,000 |
The tax relief for PRS is more worth it if you taxable income is >RM70k, because you will save at least RM330/year immediately (up to RM900/year if you taxable income is higher).
Versa is giving you RM50 bonus when you invest in PRS via Versa, just join their PRS Bonus Quest via the app! 🤑
For new users, you will also get RM15 welcome rewards when you use our referral code “VDOITDUIT”.
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Final thoughts on Income Tax
As a responsible Malaysian, it is important to pay income tax to help our country grow. No one ever become poor from giving.
As a responsible adult, it is also important to plan your financials properly, and this includes proper tax planning and maximising all the tax benefits given by our government.
Together we can be a better adult!
Cheers,
HY🦭 and Guan🍉
DoitDuit
Disclaimer: This article is in no way financial advice. It is purely for educational purposes only. You are highly recommended to conduct all necessary due diligence and make your own informed decisions before making any financial decisions.
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