Malaysia's Budget 2027 speech on 9 October 2026 proposed raising the individual tax relief to RM12,000 from RM9,000. The Finance Ministry also proposed cutting two income tax rates for resident individuals by 1 percentage point.
RM12,000Individual tax reliefProposed, from RM9,000; last reviewed in 2010
18% and 24%New ratesFor RM70,001 to RM100,000 and RM100,001 to RM150,000
RM1,600Extra disposable incomeUp to this amount for about 5 million taxpayers, the speech said
Source: Ministry of Finance, Budget 2027 speech, 9 October 2026, paragraphs 29 to 31.
Main points
- The speech said the relief threshold was last reviewed in 2010.
- The rates for RM70,001 to RM100,000 and RM100,001 to RM150,000 of chargeable income would fall to 18% and 24%.
- Income above RM1 million would be taxed at 30%.
What the tax proposals mean for employees and employers
If you are an employee
- If the RM12,000 replaces the RM9,000 individual relief, chargeable income falls by RM3,000. At RM60,000 of chargeable income, the table below shows RM330 less tax.
- The speech added relief for postpartum care, sports shoes, AI software subscriptions and pet vaccination, among others.
- Try the figures in the monthly tax deduction (PCB) calculator.
If you are an employer
- The speech gives no start date for the changes.
- The take-home pay calculator shows pay after tax on current rules.
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Two income tax rates would fall by 1 percentage point
Proposed changes to individual tax in Budget 2027
| Measure | Current | Proposed |
|---|---|---|
| Individual relief | RM9,000 | RM12,000 |
| Rate, RM70,001 to RM100,000 | 19% | 18% |
| Rate, RM100,001 to RM150,000 | 25% | 24% |
| Rate, income above RM1 million | 28% to RM2 million, 30% above | 30% |
The speech describes the first measure as the relief threshold "for individual and dependent relatives".
New and wider tax reliefs in the speech
- Medical treatment would include postpartum care services.
- Care of parents and grandparents would cover all care-related expenses, not only medical care.
- Sports shoes would become a relief.
- Education and skills training fees would cover all fields of study and tuition for children.
- Lifestyle relief would include AI software and application subscriptions, pet vaccination and adopting pets from registered animal shelters.
Tax on RM40,000 to RM120,000 under current and proposed rules
| Chargeable income now | Tax now | Chargeable income after relief | Tax proposed | Tax saved |
|---|---|---|---|---|
| RM40,000 | RM900 | RM37,000 | RM720 | RM180 |
| RM60,000 | RM2,600 | RM57,000 | RM2,270 | RM330 |
| RM80,000 | RM5,600 | RM77,000 | RM4,960 | RM640 |
| RM120,000 | RM14,400 | RM117,000 | RM13,180 | RM1,220 |
Foundific calculations with LHDN's current resident rates, before rebates and other reliefs.
The proposed column assumes the RM12,000 replaces the RM9,000 individual relief, which lowers chargeable income by RM3,000, and applies the 18% and 24% rates. The rows stay below RM150,000; the speech gives no rates for income from RM150,001 to RM1 million.
What the speech does not say yet
- The year of assessment from which the changes start.
- Whether the RM12,000 covers the individual relief alone or other reliefs too.
- How the 30% rate above RM1 million relates to the current 28% band up to RM2 million.
- The cap for each new relief.
Where to follow the tax changes
- LHDN publishes current tax rates on its tax rate page.
- Estimate monthly deductions with the PCB calculator.
- See pay after EPF, SOCSO, EIS and tax with the take-home pay calculator.
- Read wage growth in Malaysia for median pay against inflation.
- The same speech covered gig workers; see the gig worker package post.
- The speech gives no next release date for the tax rules.
Related guides
Sources
Ministry of Finance, Budget 2027 speech; LHDN tax rates
- Ministry of Finance, Budget 2027 speech (English translation) 9 October 2026, paragraphs 29 to 31. The speech says the Bahasa Malaysia version prevails. Copy kept in data/my/mof/raw.
- LHDN, Tax rate (YA 2023, 2024 and 2025) Current resident rates, used for the comparison and the worked table.
