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- Complete Guide on How to Pay Lesser Income Tax in Malaysia (2025)
Complete Guide on How to Pay Lesser Income Tax in Malaysia (2025)
Your complete guide on how to pay lesser personal income tax in 2025, using tax reliefs, tax rebates, tax deductions and tax exemptions!
DoitDuit | Your Investing Friend
October 26, 2025
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.
Tax tier from 2023 to 2025
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) |
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Who needs to pay tax
Only tax residents of Malaysia need to pay income tax. 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 also provide 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 2025
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.
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 |
Disabled individual | 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 (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 (child <6 y.o.) | RM3,000 |
SSPN | RM8,000 |
Disabled child (<18 y.o.) | i) RM6,000 if disabled child below 18 y.o. ii) RM14,000 if disabled child 18 y.o. and above, not married & studying tertiary education |
Basic supporting euqipment 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 (books & magazines, computer & smartphone, broadband, self skill enhancement courses) | RM2,500 |
EV charging facilities | RM2,500 |
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) - Dental examination & treatment (max RM1,000) - Medical examination (max RM1,000) - Covid test (max RM1,000) - Mental health examination (max RM1,000) - Assessment of intellectual disability (max RM4,000, applicable for child 18 y.o. and below) - Early intervention program (max RM4,000, applicable for child 18 y.o. and below) |
Life insurance premiums / EPF voluntary contributions | 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 worth it if you taxable income is >RM50k, 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
4.2% p.a. for Versa Save (Versa’s money market fund that is like TNG+), when you invest RM3k into Versa’s PRS; and
RM15 welcome rewards when you use our referral code “VDOITDUIT”.
Our RM15 welcome rewards is the highest in the market 🤩
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!
If you are keen to receive more actionable financial knowledge like this, please consider to be a paid subscribers and join the community of hardworking young adults 💪
Paid subscribers will get the following perks:
Offline community meetup once every month
Exclusive groupchat for paid subscribers on Telegram
Exclusive content on stock analysis, analyst briefings, financial tips (via email and Telegram)
Access to DoitDuit’s portfolio
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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