Malaysia Income Tax 2027: Proposed Rates, RM12,000 Relief
Budget 2027 proposes raising the individual income tax relief from RM9,000 to RM12,000 and cutting the tax rate by one percentage point for chargeable income of RM70,001 to RM150,000, Prime Minister Anwar Ibrahim announced on Oct. 9. These are proposals, not yet law. The 30% top rate would apply from RM1 million of chargeable income instead of RM2 million. The changes are proposed to start with the 2027 year of assessment (YA 2027), the tax annex says, so they would affect income earned in 2027 and the return you file in 2028.
About 5 million taxpayers would get up to RM1,600 more in disposable income, the speech says (para. 31). The rates and reliefs below come from paragraphs 29 and 30 and the Finance Ministry's tax measures annex. The savings examples are our own calculations from those bands.
Proposed income tax rates for resident individuals
| Chargeable income (RM) | Proposed (from YA 2027) | Current |
|---|---|---|
| 0 to 5,000 | 0% | 0% |
| 5,001 to 20,000 | 1% | 1% |
| 20,001 to 35,000 | 3% | 3% |
| 35,001 to 50,000 | 6% | 6% |
| 50,001 to 70,000 | 11% | 11% |
| 70,001 to 100,000 | 18% | 19% |
| 100,001 to 150,000 | 24% | 25% |
| 150,001 to 400,000 | 25% | 25% |
| 400,001 to 600,000 | 26% | 26% |
| 600,001 to 1,000,000 | 28% | 28% |
| Above 1,000,000 | 30% | 28%* |
*The current 28% rate applies up to RM2 million, and 30% only above that. Chargeable income is your income after reliefs and deductions. The current RM100,001 to RM400,000 band would be split at RM150,000 (tax annex, appendix 1).
How much could you save?
| Chargeable income now | Change in your tax |
|---|---|
| RM8,000 to RM20,000 | Saves RM30 |
| RM23,000 to RM35,000 | Saves RM90 |
| RM38,000 to RM50,000 | Saves RM180 |
| RM53,000 to RM70,000 | Saves RM330 |
| RM80,000 | Saves RM640 |
| RM100,000 | Saves RM840 |
| RM120,000 | Saves RM1,220 |
| RM153,000 to RM400,000 | Saves RM1,550 |
| RM403,000 to RM600,000 | Saves RM1,580 |
| RM603,000 to RM1,003,000 | Saves RM1,640 |
| RM1,085,000 | No change |
| RM1,500,000 | Pays RM8,300 more |
| About RM2 million and above | Pays RM18,300 more |
These are our own calculations. They assume your individual relief rises by RM3,000, which lowers chargeable income by RM3,000, and they ignore tax rebates, other reliefs and any later changes. On these assumptions the saving is RM1,550 from about RM153,000 to RM400,000 and RM1,580 from about RM403,000 to RM600,000. It peaks at RM1,640 from about RM603,000 to RM1,003,000, then shrinks to nothing at about RM1,085,000. Above that, tax rises. The "up to RM1,600" in the speech is close to the peak.
The RM12,000 relief
The relief for an individual and dependent relatives was last raised for the 2010 year of assessment, from RM8,000 to RM9,000. It is proposed to rise to RM12,000 from YA 2027 (tax annex, appendix 2).
Reliefs that would be widened
- Health and well-being: the RM10,000 limit stays. Postnatal care up to RM3,000 is added, and the separate RM1,000 relief for breastfeeding equipment is merged into it (appendix 4).
- Parents and grandparents: the RM8,000 limit stays, but it would cover all kinds of care at home, day care or residential care, not only medical care. A written declaration from the carer, or a copy of the carer's work permit, with receipts is needed, but no doctor's verification (appendix 3).
- Education and skills training fees: the RM7,000 limit stays. It would cover courses from certificate to PhD level in any field, up to RM3,000 for technical and vocational (TVET) courses for yourself or your spouse, and up to RM2,000 in total for non-work courses for yourself or your spouse, or for your children's courses, classes or tuition in STEM, arts, languages and religion (appendix 5).
- Lifestyle: the RM2,500 limit stays, and AI software subscriptions for yourself, your spouse or your child would be added (appendix 6).
- Sports: the RM1,000 limit stays, and sports shoes up to RM300 would be added (appendix 7).
- Domestic tourism: the relief of up to RM1,000 for entrance fees to attractions and cultural programmes would be extended to YA 2027 (appendix 8).
- SOCSO: the RM350 relief would cover mandatory contributions to the Self-Employment Social Security Scheme for passenger transport, goods or food transport and hawkers, and a further RM150 would be allowed for voluntary contributions to LINDUNG 24 and LINDUNG Kendiri (appendix 9).
Business and other tax proposals
- Small businesses: the income tax rate for MSMEs would fall to 14% on the first RM150,000 and 16% on RM150,001 to RM600,000, and stay at 24% above that (appendix 11). It would be worth up to RM6,000 for 300,000 MSMEs, and an SME association welcomed it.
- First home: a full stamp duty exemption on loan agreements and transfers for a first home priced up to RM500,000. For a home up to RM750,000, the first RM500,000 would be exempt and half of the balance. It would cover agreements signed from Jan. 1, 2027 to Dec. 31, 2030 (appendix 16).
- Bank accounts: opening a savings or current account would be exempt from stamp duty from Jan. 1, 2027 (appendix 18).
- School fund: cash gifts to a school's public contribution fund could be deducted up to 10% of aggregate income, and the fund could also pay for repairs, equipment and running costs (appendix 10).
When would the changes start?
The proposals would apply from YA 2027. Your 2026 return, filed in 2027, uses the current rates. Tax measures become law once Parliament passes the related legislation. MPs debate the Budget from Oct. 12 to 22, ministers reply from Oct. 26 to 29 and the committee stage runs from Nov. 2 to 26, Bernama reports. You can check your own tax position with the Inland Revenue Board at hasil.gov.my. For all Budget 2027 measures, see our Budget 2027 page.
Rates and reliefs are the proposals in the Budget 2027 tax measures annex published on Oct. 9, 2026, checked on Oct. 12. The savings figures are illustrative calculations. This page will be updated if the details change.
