Tax season is upon us once again. In Malaysia, individuals can start filing their tax to the Inland Revenue Board of Malaysia (IRBM) from 1 March 2025.
Employed individuals will have until 30 April 2025 to file their taxes. On top of that, they get a grace period of 15 days to file their tax and pay balance of tax if there’s any, so effectively the final due date for tax submission is 15 May 2025.
Aside from filing your tax, you may also want to know how the tax calculation works. If you didn’t know, Malaysia adopts a progressive tax rate system. This means that the higher your income is, the higher the tax rate you will be charged.
What Are The Tax Rates In Malaysia
There are a total of 10 income tax brackets for assessment year 2024. The following table shows the tax rates levied on chargeable income.
As you can see from the table, individuals do not pay any income tax on their first RM5,000. You will notice that income tax rates will gradually increase as the income earned increases. Individuals in the highest income band, earning RM2 mil and above are charged a tax rate of 30%.
Effective from YA2023, the government reduced income tax rates for individuals with a chargeable income of below RM100,000. At the same time, income tax rates for individuals with a chargeable income of above RM100,000 were raised.
For example, an individual with a chargeable income of RM70,000 will be charged with 11% for YA2024. An individual with the same chargeable income was charged with a tax rate of 13% for YA2022.
The tax rates were amended to alleviate tax costs of middle-income earners and increase the tax contributions of high-income earners.
| Chargeable Income for YA 2024 (RM) | Income Tax Rate | Tax Payable (RM) |
| On the First 5,000 | 0% | 0 |
| On the First 5,000
Next 15,000 |
1% |
0
150 |
| On the First 20,000 Next 15,000 |
3% |
150
450 |
| On the First 35,000 Next 15,000 |
6% |
600
900 |
| On the First 50,000 Next 20,000 |
11% |
1,500
2,200 |
| On the First 70,000 Next 30,000 |
19% |
3,700
5,700 |
| On the First 100,000 Next 300,000 |
25% |
9,400
75,000 |
| On the First 400,000 Next 200,000 |
26% |
84,400
52,000 |
| On the First 600,000 Next 1,400,000 |
28% |
136,400
392,000 |
| On the First 2,000,000
Next ringgit |
30%
|
528,400
|
Source: Inland Revenue Board of Malaysia
How Much Income Tax Do You Actually Need To Pay?
Knowing how your tax is calculated allows you to check if you’re paying the correct amount.
To calculate how much tax you need to pay, we refer to the tax rate table above.
For example, if you’re earning RM50,000 a year, your tax will be calculated as follows. For the first RM5,000, a 0% tax rate applies, which means you don’t have to pay anything.
For the following RM15,000, a 1% tax rate will be imposed so you need to pay RM150. The next RM15,000 will incur a higher tax of 3%, meaning you will need to pay RM450. Lastly, a tax of 6% will be charged on the following RM15,000, which equals RM900. This brings the total tax amount to RM1,500.
| Taxable income | Tax rate | Tax amount |
| First RM5,000 | 0% | RM0 |
| Next RM15,000 | 1% | RM150 |
| Next RM15,000 | 3% | RM450 |
| Next RM15,000 | 6% | RM900 |
| RM1,500 |
So, as you can see, with the progressive tax system, the tax rates increase as your income does.
Lowering Your Tax Bill With Reliefs
We only need to pay tax on chargeable income. We don’t have to pay tax on our EPF contributions we make every month.
When filing your tax return form, you fill in your income and you will notice a list of tax reliefs. Tax reliefs is a scheme by the government to help you reduce your chargeable income and hence, your payable tax amount as well for certain activities.
For example, individuals who spent on medical treatments, equipment, nursing care and health check-ups for their elderly parents are entitled to up to RM8,000 in tax relief.
If you’re earning RM50,000 a year and spent on medical treatments for your parents, you can claim up to RM8,000 tax relief and have your chargeable income be reduced to RM42,000.
Effectively, you will need to pay tax only on your chargeable income of RM42,000. The tax amount you need to pay is RM1,020.
| Taxable income | Tax rate | Tax amount |
| First RM5,000 | 0% | RM0 |
| Next RM15,000 | 1% | RM150 |
| Next RM15,000 | 3% | RM450 |
| Next RM15,000 | 6% | RM420 |
| RM1,020 |
Individuals can also claim tax deductions on education fees, medical equipment for family members with disability, medical insurance. Married couples who file joint tax can claim tax deductions for medical treatments for their spouse.
You can also refer to the income tax calculator on the Inland Revenue Board Malaysia’s website to learn more about your tax calculations.
Read Also: Malaysia Income Tax For YA2025: Guide To Tax Reliefs That You Can Claim
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