During the tabling of the Budget 2025, Prime Minister Anwar Ibrahim announced that the government will be pulling back subsidy for RON 95 petrol – the most commonly used type of petrol in Malaysia – from the top 15% household income earners, comprising of the ultra-rich, starting from mid 2025.
Savings from removal of the subsidy will be channelled to support other purposes such as the development of schools, healthcare facilities and public transportation. Although this would help rationalise subsidies, some middle-class families have voiced concerns that they could be affected financially.
In Malaysia, the government looks at household income data when formulating policies and distributing aid. According to the Department of Statistics Malaysia (DOSM), households earning a combined monthly income of more than RM11,820 are considered as top 20% of earners. Some of these households are, however, not part of the ultra rich population but are worried that they may be required to pay unsubsidised prices for petrol.
Since the Budget 2025 presentation, it has been reported that the government is still working on defining the household income classification for the T15 or top 15% of earners. The government will also ensure that the subsidy removal will not affect those with lower income and that it will make necessary adjustments if the T15 threshold is not suitable and may limit it to top 10% of income earners.
What Are The Different Household Income Groups In Malaysia?
Each household in Malaysia is categorised into different income groups based on the combined monthly earnings of members of a household. There are mainly three income groups, which are the top 20% income earners (T20), middle 40% income earners (M40) and bottom 40% income earners (B40).
The classification of households into income groups determines if a household or individual is eligible for subsidy programmes and government aid. For example, the Sumbangan Tunai Rahmah (STR) programme provides cash handouts to eligible recipients from B40 and M40 households.
With the implementation of targeted subsidies, the income classification of households in Malaysia will be more important than ever.
How Much Does Each Household Income Group Earn?
According to an income report in 2022 by the DOSM, households that meet a minimum income threshold of RM11,820 are considered top 20% income earners.
Households with a monthly income of RM5,250 to RM11,819 are in the middle 40% income group. The bottom 40% income group has a monthly income between less than RM2,560 to RM5,249.
| Income Group | Average Income | Income Threshold | |
| T20 | T2 | RM20,776 | RM15,870 and above |
| T1 | RM13,475 | RM11,820 – RM15,869 | |
| M40 | M4 | RM10,552 | RM9,450 – RM11,819 |
| M3 | RM8,523 | RM7,690 – RM9,449 | |
| M2 | RM6.979 | RM6,340 – RM7,689 | |
| M1 | RM5,770 | RM5,250 – RM6,339 | |
| B40 | B4 | RM4,764 | RM4,310 – RM5,249 |
| B3 | RM3,875 | RM3,440 – RM4,309 | |
| B2 | RM3,034 | RM2,560 – RM3,439 | |
| B1 | RM2,012 | Less than RM2,560 | |
Source: DOSM
Other Factors To Consider Besides Household Income
Although household income is one of the main factors for deciding the eligibility of receiving government subsidy and aid, it’s also important to look into other aspects such as location.
Depending on the place that a household or individual live in, the expenses may vary. Families residing in urbanised cities such as Kuala Lumpur may earn a higher income but would also have higher expenditures.
According to EPF’s Belanjawanku Expenditure Guide 2022, the living cost in Kuala Lumpur is the highest at RM1,930 per month followed by Georgetown in Penang at RM1,830 and Johor Bahru in Johor at RM1,530.
Meanwhile, cities with the lowest expenses are Kuala Terengganu (Terengganu), Kota Bharu (Kelantan) and Alor Setar (Kedah) at RM1,630, RM1,540 and RM1,530.
Read Also: Median Household Income By State: How Much Do Malaysian Households Earn
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