How to Calculate Income Tax in Malaysia: Rates, Reliefs and Examples (YA2025)

To work out your Malaysian income tax, take your yearly income, subtract your reliefs to get chargeable income, apply LHDN's resident tax rates, and then subtract any rebates. A single employee with no other reliefs pays no tax on an annual employment income of up to about RM37,333 (around RM3,111 a month), because of the RM9,000 personal relief and the RM400 rebate.

This guide covers the annual tax you declare on Form BE. PCB, the tax your employer deducts every month, is only an advance payment towards it. For the monthly side, see how to calculate take-home salary in Malaysia.

The formula in four steps

1. Total income: salary, bonus, commission, allowances and benefits for the calendar year (the "basis year"). Income earned in 2025 is Year of Assessment (YA) 2025, filed in 2026.
2. Minus reliefs: personal relief, EPF, SOCSO, insurance, lifestyle and the other reliefs you qualify for. The result is your chargeable income.
3. Apply the tax rates below to the chargeable income.
4. Minus rebates: RM400 if chargeable income is RM35,000 or less, plus zakat or fitrah you paid. What's left is your tax payable. Compare it with the PCB already deducted: you either get a refund or pay the balance.

Non-residents don't follow these steps. They pay a flat 30% and get no reliefs. Whether you're a resident is decided under section 7 of the Income Tax Act 1967.

Income tax rates (resident individuals)

LHDN lists one rate table for YA2023, YA2024 and YA2025:

Read it like this: on a chargeable income of RM44,550, you pay RM600 on the first RM35,000 plus 6% of the remaining RM9,550 (RM573), so RM1,173 in total.

These are marginal rates. Moving into the 11% band doesn't raise the tax on the income you've already earned. Only the ringgit above RM50,000 is taxed at 11%.

LHDN hasn't yet published a separate table for YA2026 (income earned in 2026). KiraBoss uses the same bands until it does.

Reliefs most employees can claim (YA2025)

These are the reliefs from LHDN's YA2025 list that apply to most salaried workers:

• Individual and dependent relatives: RM9,000, automatic
• EPF: up to RM4,000 (your share only, not your employer's)
• Life insurance or family takaful: up to RM3,000, on top of the EPF RM4,000 (RM7,000 combined)
• SOCSO and EIS contributions: up to RM350
• Lifestyle: up to RM2,500 for books, a personal computer, smartphone or tablet, internet bills in your own name, and skills courses
• Sports: an extra RM1,000 for sports equipment, gym fees, facility rental and approved competitions (parents' expenses count from YA2025)
• Medical: up to RM10,000 for serious illness, fertility treatment, vaccination and dental care, plus a RM1,000 sub-limit for medical check-ups and health screening
• Parents' medical and care expenses: up to RM8,000
• Spouse with no income (or alimony): RM4,000
• Each child under 18: RM2,000. A child aged 18 or over studying for a diploma or degree: RM8,000
• Childcare or kindergarten fees for a child aged 6 or below: up to RM3,000
• SSPN net deposit: up to RM8,000 (deposits minus withdrawals in the year)
• PRS or deferred annuity: up to RM3,000
• Education fees for yourself: up to RM7,000
• Housing loan interest on a first home (SPA signed from 2025 to 2027): up to RM7,000 for a home up to RM500,000, or RM5,000 for RM500,000–RM750,000

There are more, including disability reliefs and insurance for education or medical benefits. Check LHDN's full YA2025 relief list for the current limits before you file.

Why reliefs are worth more at higher incomes: a relief reduces your income in your top band. RM1,000 of lifestyle relief saves RM60 if your top band is 6%, but RM190 if it's 19%.

Worked example 1: single, gaji RM5,000

Nadia is single, a tax resident, and earned RM5,000 a month in 2025 with no bonus. She bought a RM1,200 phone, paid RM600 for home internet in her own name and had a RM300 health screening.

• Total income: RM60,000
• Personal relief: −RM9,000
• EPF (11% = RM6,600, capped): −RM4,000
• SOCSO + EIS (RM34.65 a month = RM415.80, capped): −RM350
• Lifestyle (phone + internet): −RM1,800
• Medical check-up: −RM300
• Chargeable income: RM44,550
• Tax: RM600 + 6% × RM9,550 = RM1,173
• Rebate: none (chargeable income is above RM35,000)

Her employer deducted PCB of RM110 a month (RM1,320 for the year), based only on her personal and EPF relief, because she never declared her other reliefs on Form TP1. After filing Form BE, she's due a refund of about RM147. If she had submitted TP1, her monthly PCB would have been lower instead.

Worked example 2: married with two children, gaji RM6,000

Hafiz earned RM6,000 a month in 2025. His wife has no income, and they have two children under 18. He claims both children, and pays RM2,400 a year in life insurance premiums. He also deposited RM2,000 into SSPN and paid RM500 zakat.

• Total income: RM72,000
• Personal relief: −RM9,000
• EPF (11% = RM7,920, capped): −RM4,000
• SOCSO + EIS (RM41.65 a month = RM499.80, capped): −RM350
• Spouse relief: −RM4,000
• Two children under 18: −RM4,000
• Life insurance: −RM2,400
• SSPN: −RM2,000
• Chargeable income: RM46,250
• Tax: RM600 + 6% × RM11,250 = RM1,275
• Zakat rebate: −RM500
• Tax payable: RM775

With only the automatic reliefs (personal, EPF and SOCSO), his chargeable income would be RM58,650 and his tax RM2,451.50. The family reliefs and his own spending cut the bill by RM1,176.50, and zakat takes off another RM500, ringgit for ringgit, because it's a rebate rather than a relief.

Worked example 3: gaji RM3,000, no tax at all

Mei Ling earns RM3,000 a month (RM36,000 a year).

• RM36,000 − RM9,000 personal relief − RM3,960 EPF = RM23,040 chargeable income
• Tax: RM150 + 3% × RM3,040 = RM241.20
• Rebate of RM400 (chargeable income is RM35,000 or less): tax payable RM0

That's before her SOCSO relief, so she owes nothing either way. LHDN's own threshold table puts the no-tax point for a single person at an annual income of RM37,333 (RM3,111 a month). Married with joint assessment and two children, it rises to RM52,000 (RM4,333 a month).

How the RM400 rebate works

The rebate is taken off the tax itself, not off income, so it's worth a full RM400. It applies only when chargeable income is RM35,000 or less. Where the husband or wife has no income, another RM400 can apply, for a total of RM800. At RM35,001 the rebate disappears completely, so someone just above the line can pay a few hundred ringgit more than someone just below it.

When to file

Form BE (resident employees with no business income) for YA2025 was due on 30 April 2026, with a grace period to 15 May 2026 for e-Filing through MyTax. LHDN's filing programme says a return sent after the grace period counts as late from 1 May, and a penalty applies. Your Form EA from your employer shows your total pay, EPF and PCB for the year, which is your starting point.

Common mistakes

• Treating PCB as the final tax. PCB is an estimate. Your actual tax is settled when you file Form BE.
• Claiming your employer's EPF. Only the employee share counts, and it's capped at RM4,000.
• Applying the top rate to all your income. Each band is taxed at its own rate.
• Forgetting the rebate or zakat. Both come off the tax, not off income.
• Claiming lifestyle items without receipts, or for an internet bill that isn't in your name. Keep the receipts in case LHDN asks for them.
• Using last year's relief limits. Several limits change every Budget, so check the list for the year you're filing.

Estimate yours

Start with your monthly figures in the KiraBoss salary calculator, which shows EPF, SOCSO, EIS and PCB. Then use the steps above with your actual reliefs to estimate whether you'll get a refund at filing time. If a bonus pushed your PCB up this year, this guide on bonus-month PCB explains why.