Malaysian Income Tax Rates for YA 2025 and 2026, Explained

Malaysian tax residents pay income tax on a sliding scale from 0% to 30%, charged on chargeable income, which is what's left after reliefs. The rates are the same for the 2025 and 2026 years of assessment. Because each rate applies only to the slice of income within its band, most people's actual tax is a small share of their salary.

The resident tax rate table

This is the table published by the Inland Revenue Board (LHDN), in use for YA 2025 and YA 2026:

Non-residents are taxed differently, generally at a flat rate with no personal reliefs.

Gross income vs chargeable income

You aren't taxed on your salary. You're taxed on your chargeable income: your total income minus the reliefs you're entitled to. Every resident individual gets RM9,000 of relief automatically, and others depend on what you spend or save, such as EPF contributions, life insurance or takaful, medical expenses and lifestyle purchases. Reliefs and Rebates covers the main ones.

A worked example

Aina earns RM5,000 a month, or RM60,000 a year. For YA 2025, she claims:

• Individual relief: RM9,000
• EPF: RM4,000 (her 11% comes to RM6,600, but the relief is capped at RM4,000)
• Lifestyle purchases (books, a laptop, internet): RM2,500

Her chargeable income is RM60,000 − RM15,500 = RM44,500.

Her tax: the first RM35,000 costs RM600 (from the table). The remaining RM9,500 falls in the 6% band: RM9,500 × 6% = RM570. Total: RM1,170.

So although her top rate is 6%, her tax is under 2% of her gross salary. The rate on your last ringgit (your marginal rate) is what matters when you work out the value of a relief. Each extra RM1,000 of relief saves Aina RM60.

Three myths

"A raise can push me into a higher bracket and I'll take home less." No. A higher rate only applies to the ringgit above the band's threshold, so a raise always leaves you better off.

"Tax relief means I get that money back." A relief reduces chargeable income. RM3,000 of relief saves RM3,000 × your marginal rate, not RM3,000.

"Reliefs and rebates are the same." A rebate comes off your tax bill directly. Two to know: a RM400 rebate if your chargeable income is RM35,000 or less, and a rebate for zakat paid to an official authority (see how to calculate zakat on your salary).

The RM35,000 cliff

That RM400 rebate stops completely above RM35,000 of chargeable income. At exactly RM35,000, tax is RM600 − RM400 = RM200. At RM36,000, it is RM660 with no rebate. So if you're just above RM35,000, an extra relief such as a PRS or EPF top-up can be worth far more than the table suggests. See is PRS worth it for the tax relief?

Residents, deadlines and forms

You're generally a tax resident if you are in Malaysia for at least 182 days in a calendar year, though LHDN has other tests that can link days across years. Resident status is what gives you access to the scale rates and reliefs above.

LHDN's standard filing deadlines are 30 April for individuals with no business income (Form BE) and 30 June for those with business income (Form B). LHDN usually allows extra time for e-Filing, typically 15 days, but confirm the dates on the MyTax portal each year. e-Filing Without Fear walks through the process.

What's new

Budget 2026 left the rates unchanged but adjusted some reliefs from YA 2026. For example, it extended the life insurance or takaful relief to cover premiums paid for your children, and widened the childcare relief to cover registered childcare and after-school centres for children up to 12. Check LHDN's relief list before you file.

If you're self-employed or have income from side work, the same rates apply, but you file a different form and may pay by instalment. For how monthly tax deductions (PCB) and filing fit together, see How Malaysian Income Tax Actually Works. To see where your after-tax pay goes, try the Budget Analyzer.

References

• Inland Revenue Board of Malaysia (LHDN), Individual Tax Rate
• LHDN, Rebates
• PwC Malaysia, 2025/2026 Malaysian Tax Booklet: Personal Income Tax (rates for YA 2025 and YA 2026)
• KPMG Malaysia, 2026 Budget Proposals
• Ramco, Malaysia Budget 2026 Tax Reliefs