At a Glance
| Before | Budget 2027 | From | |
|---|---|---|---|
| Personal relief (self and dependants) | RM9,000 | RM12,000 | YA2027 |
| Children's tuition and classes (STEM, arts, languages, religion) | no relief | up to RM2,000 | YA2027 |
| Tax rate, chargeable income RM70,001 to RM100,000 | 19% | 18% | YA2027 |
| Tax rate, chargeable income RM100,001 to RM150,000 | 25% | 24% | YA2027 |
| Top rate of 30% starts above | RM2,000,000 | RM1,000,000 | YA2027 |
| MSME company tax, first RM150,000 | 15% | 14% | YA2027 |
| MSME company tax, RM150,001 to RM600,000 | 17% | 16% | YA2027 |
| Small-value asset limit, per asset | RM2,000 | RM3,000 | YA2027 |
1Personal Reliefs
1.1 Personal Relief Up From RM9,000 to RM12,000
The first increase since YA2010. Every resident individual gets it automatically, with no receipts needed.
1.2 Children's Tuition and Classes - New
For the first time, a parent can claim fees paid for a child's courses, classes or tuition in STEM, arts, languages or religion. That covers most of what parents actually pay for: maths and science tuition, coding, music and art classes, English, Mandarin or Bahasa Malaysia tuition, and religious classes.
| Limit | RM2,000 a year |
| Shared with | Your own and your spouse's non-work courses (hobby, language, self-improvement classes) - one RM2,000 sub-limit between them |
| Sits inside | The Education and Skills Training relief, overall cap RM7,000 |
| Before Budget 2027 | No relief for a child's tuition or classes at any age |
| Not affected | The separate childcare relief for registered childcare centres and kindergartens (and, from YA2026, day-care and after-school transit centres for children up to 12) continues as before |
| Still to be confirmed | Whether there is an age limit for the child, whether the tuition centre or teacher must be registered, and what receipt LHDN will accept. These come with the Finance Bill and LHDN guidelines |
Keep official receipts from 1 January 2027 that show the centre's name, the child's name, the subject and the amount paid.
1.3 Other Reliefs Widened (Caps Unchanged Unless Stated)
| Relief | What is new | Cap |
|---|---|---|
| Health and Well-being (renamed from medical) | Adds postnatal / confinement care (up to RM3,000). Breastfeeding equipment for a child aged 2 and below, paid for by self or spouse, is folded in (up to RM1,000). | RM10,000 overall |
| Parents and grandparents care | Covers all care costs, not only medical: at home, day care or residential care. No doctor's certification needed; a written declaration from the carer (not the taxpayer, spouse or children) or the carer's work permit, plus receipts. | RM8,000 |
| Education and Skills Training (merged) | Own studies, certificate to PhD, any field (previously limited to set fields below master's level), at a recognised local institution or professional body. TVET upskilling for self or spouse (up to RM3,000). The children's classes in 1.2 (up to RM2,000). | RM7,000 overall |
| Lifestyle | Adds AI software and app subscriptions (self, spouse, child), pet adoption from a registered shelter, and vet fees for pet vaccination, spaying or neutering. | RM2,500 |
| Sports | Adds sports shoes for self, spouse, child or parents (up to RM300). | RM1,000 |
| SOCSO | The existing RM350 now also covers mandatory Lindung Kendiri contributions (passenger transport, goods or food transport, hawkers). Up to RM150 extra for voluntary Lindung 24 and the 17 voluntary Lindung Kendiri sectors. | RM350 + up to RM150 |
| Domestic tourism | Extended for YA2027: entrance fees to museums, zoos, theme, national, marine and geo parks, cultural and arts programmes. | RM1,000 |
All other reliefs (spouse, children, EPF and life insurance, education and medical insurance, PRS, SSPN, childcare, disability) were not changed by Budget 2027 and carry forward. We will publish the full YA2027 relief table once LHDN issues it.
Watch the wording. The "vaccination" added to lifestyle relief is for pets. Your family's own vaccinations stay under the Health and Well-being relief, as before.
2Personal Income Tax
2.1 New Tax Rates (Resident Individuals, From YA2027)
| Chargeable income (RM) | Current rate | YA2027 rate |
|---|---|---|
| 0 - 5,000 | 0% | 0% |
| 5,001 - 20,000 | 1% | 1% |
| 20,001 - 35,000 | 3% | 3% |
| 35,001 - 50,000 | 6% | 6% |
| 50,001 - 70,000 | 11% | 11% |
| 70,001 - 100,000 | 19% | 18% |
| 100,001 - 150,000 | 25% | 24% |
| 150,001 - 400,000 | 25% | 25% |
| 400,001 - 600,000 | 26% | 26% |
| 600,001 - 1,000,000 | 28% | 28% |
| 1,000,001 - 2,000,000 | 28% | 30% |
| Above 2,000,000 | 30% | 30% |
The 30% rate is not new. It already applies above RM2 million. What changes is that it now starts above RM1 million.
2.2 What It Means in Ringgit
Illustration only: assumes the full extra RM3,000 relief is used, no rebates, nothing else changes.
| Chargeable income today | Tax today | Tax YA2027 | Change |
|---|---|---|---|
| RM50,000 | RM1,500 | RM1,320 | save RM180 |
| RM80,000 | RM5,600 | RM4,960 | save RM640 |
| RM120,000 | RM14,400 | RM13,180 | save RM1,220 |
| RM200,000 | RM34,400 | RM32,850 | save RM1,550 |
| RM500,000 | RM110,400 | RM108,820 | save RM1,580 |
| RM1,500,000 | RM388,400 | RM396,700 | pay RM8,300 more |
| RM3,000,000 | RM828,400 | RM846,700 | pay RM18,300 more |
Above roughly RM1.085 million of chargeable income, the higher 30% band outweighs the savings and total tax goes up. The Government's own estimate is up to RM1,600 more in the pocket for about 5 million taxpayers.
3Corporate Tax
3.1 MSME Income Tax Rates - From YA2027
| Chargeable income | Current | YA2027 | Saving |
|---|---|---|---|
| First RM150,000 | 15% | 14% | up to RM1,500 |
| RM150,001 to RM600,000 | 17% | 16% | up to RM4,500 |
| Above RM600,000 | 24% | 24% | none |
Maximum saving RM6,000 a year, for about 300,000 MSMEs. The MSME test is unchanged: paid-up capital of RM2.5 million or less, and annual sales of RM50 million or less (plus the existing ownership conditions). Companies outside the test stay at 24%.
3.2 Salary Must Be Paid Through a Bank or Cashless Channel - From YA2028
Companies that are not MSMEs can claim a tax deduction for salaries only if paid through a bank or a cashless method prescribed under the Employment Act 1955. Cash wages lose the deduction. Other expenses are not affected. MSMEs are exempt, but we recommend moving to bank payment anyway.
3.3 Capital Allowances
- Small-value assets: per-asset limit up from RM2,000 to RM3,000. For non-MSMEs, the yearly total cap rises from RM20,000 to RM30,000 (MSMEs have no total cap). From YA2027.
- Accelerated Capital Allowance (ACA) for heavy machinery, plant and general machinery bought from local manufacturers, and for ICT equipment, computer software packages and the consultation, licensing and incidental fees of developing customised software (20% initial, 40% annual, so the cost is fully written off within two years). Due to end on 31 Dec 2026; extended to cover spending from 1 Jan 2027 to 31 Dec 2030.
- Reinvestment Allowance (RA): the Government is reviewing the RA, including who qualifies and how the incentive works. Nothing changes yet. Manufacturers who rely on RA should watch for the details before planning expansion spending.
3.4 New and Extended Deductions (Companies and Individuals)
| Deduction | Condition | Period |
|---|---|---|
| Employer pays staff PTPTN loans | Full-time staff only; not the owner or the owner's relatives; nothing charged back to the employee | 1 Jan 2027 - 31 Dec 2028 |
| Bakat MADANI training programme | Companies running the programme (details to follow) | 29 Jun 2026 - 31 Dec 2030 |
| School Public Contribution Fund (TSUWAS) | Cash donations by individuals and companies, now also usable for school running costs, repairs, equipment and student programmes. Donations in kind are not deductible | up to 10% of aggregate income, from YA2027 |
| Public universities | Contributions by individuals, alumni, companies | up to 10% of aggregate income |
| Dapur Siswa MADANI | Contributions of food and equipment | 1 Jan 2027 - 31 Dec 2030 |
4What to Do Now
| Who | Action |
|---|---|
| Individuals | Start a 2027 receipts folder now. New items are claimable from 1 Jan 2027: AI subscriptions, pet adoption and vet bills, sports shoes, confinement care, all care costs for parents, and courses in any field. |
| Parents | Ask your child's tuition centre, music school or religious class for official receipts from January 2027, with the child's name and the subject. |
| Chargeable income above RM1 million | From YA2027, the slice between RM1 million and RM2 million is taxed at 30% instead of 28%. Total tax goes up once chargeable income passes about RM1.085 million, by up to about RM18,300 a year for incomes above RM2 million. Review the timing of bonuses and directors' fees, and how your income is structured, with us and your tax agent. |
| MSME owners | Check your company still meets the MSME test (paid-up capital, sales, ownership). The 1% cut is automatic, but only if you qualify. |
| Businesses planning capex | Plan 2027 to 2030 equipment and ICT purchases around ACA (locally made machinery, ICT and software) and the RM3,000 small-asset limit. |
| Employers (non-MSMEs) | Move every salary, including part-time and foreign workers, to bank transfer before your YA2028 financial year begins (for a December year end, before 1 Jan 2028). MSMEs are exempt but should move too. |
5Other Incentives and Measures
5.1 Investment Incentives
- Green Technology (GITA): the "up to 100%" headline applies to Tier 1 only (green hydrogen and ocean thermal energy projects; and for own-use assets, approved vehicles such as buses, vans, lorries and forklifts, locally produced EV infrastructure, waste composting and recycling, wastewater recycling and rainwater harvesting systems, and renewable systems paired with battery storage). Tier 2 drops to 60%, including EV charging stations and biomass, biogas, mini hydro, geothermal and wind projects, which today get 100%. For own-use assets, EV infrastructure, recycling and water systems that are not locally produced, and renewable systems without battery storage, are also Tier 2 at 60%. Allowance can be set off against 70% of statutory income (Tier 1 projects: 100% or 70%). Solar and integrated waste management are no longer listed as project activities; solar remains only as an own-use asset paired with battery storage. Applications and purchases from 1 Jan 2027 to 31 Dec 2030; assets must be applied for with MGTC within 24 months of purchase. Check the tier before you commit to solar or EV charging spending.
- Global Services Hub: new two-tier structure for MIDA applications from 1 Jan 2027. New companies pay 5%. Existing hubs pay 5% up to base income (3-year average) and 15% above it. Treasury cash pooling gets a withholding tax exemption and a stamp duty exemption on intercompany foreign-currency loans (also for the JS-SEZ).
- Malaysian shipping: full exemption YA2027 to YA2036, with spending and local staff conditions per ship.
- Shariah-compliant fund management: exemption cut from 60% to 40% of statutory income, extended for YA2028 to YA2030.
- Organisers of international incentive trips, conferences and trade exhibitions: 100% exemption extended for YA2028 to YA2030.
- Family offices (Forest City / JS-SEZ): Single Family Office at 0% on qualifying income for up to 20 years; a Multi-Family Office model is coming.
- Wholly locally owned automotive vendors relocating to Tanjong Malim: deduction for relocation costs up to RM5 million, 1 Jan 2027 to 31 Dec 2030.
- Equity crowdfunding and angel investors: existing incentives extended to 31 Dec 2030.
- Sukuk Prisma: issuance costs deductible YA2027 to YA2030; SRI Sukuk deduction continues to YA2027; SRI Sukuk and Bond Grant receipts tax exempt from 1 Jan 2027.
5.2 Stamp Duty and Indirect Tax
| Measure | Detail | When |
|---|---|---|
| First home (Malaysian citizens) | Up to RM500,000: 100% exemption on the loan agreement and transfer. Up to RM750,000: 100% on the first RM500,000, 50% on the rest | SPAs signed 1 Jan 2027 - 31 Dec 2030 |
| Abandoned housing projects revived | 100% exemption for rescue contractors, developers and original buyers | 1 Jan 2027 - 31 Dec 2030 |
| Foreign-currency loans from Malaysian banks | Duty capped at RM2,000 (loans up to RM100m) or RM5,000 (above RM100m) | from 1 Jan 2027 |
| MSME financing: CAKNA, P2P platforms, mid-tier supplier financing | Duty above RM10 remitted | CAKNA II, P2P, supplier financing: 2027 - 2030. CAKNA I: 2029 - 2030 |
| Opening a savings or current account | RM10 duty waived | from 1 Jan 2027 |
| Elderly care service tax | Cut from 8% to 6%. Fees up to RM96,000 per person a year at registered centres are fully exempt | from 1 Jan 2027 |
| Sales tax refund for traders | Traders who paid sales tax on machinery, parts and certain inputs supplied to manufacturers can claim it back | from 1 Jan 2027 |
| Langkawi and Labuan | Duty-free limit for goods taken out raised to RM10,000 (48-hour stay) | from 1 Jan 2027 |
5.3 Employers
- Minimum wage RM1,700 to RM2,000 from June 2027. MSMEs with sales below RM50 million are exempt as announced. A RM2,500 starting wage for semi-skilled jobs and graduates is also being introduced, with details still to come.
- MediAsas from January 2027: first-year premium subsidy of RM200 per employee for MSMEs with fewer than 75 staff (up to 50 staff per company).
- From 1 Jan 2027, spouses of Category I Employment Pass holders may work in Malaysia, subject to conditions.
5.4 Grants and Financing
| Support | Detail |
|---|---|
| First-time halal certification | Matching grant of up to RM5,000 for MSMEs. Separate grants of RM25,000 for halal MSMEs in fields such as cosmetics and pharmaceuticals |
| AI adoption | RM30 million through MDEC to help 4,000 MSMEs adopt AI and automate operations; the programme will also train and certify 5,000 AI professionals |
| DBKL premises | 50% rent discount throughout 2027 for over 10,000 small traders at public markets, food courts and hawker centres. Festive bazaar rates from RM400 |
| Microfinancing | RM6.6 billion in 2027 through AIM, TEKUN and BSN |
| Export financing | RM1 billion through BPMB for MSMEs entering export markets |
| Financing guarantees | Up to RM32 billion through SJPP and CGC. SJPP widened to mid-tier companies in all sectors, guarantee limit up to RM50 million; RM1 billion reserved for local mergers and acquisitions |
| SMEs hit by the West Asia conflict | Bank Negara adds a further RM5 billion to its financing fund |
| Agro-food | Over RM1 billion through Agrobank, Bank Rakyat and the Malaysia Co-operative Societies Commission |
| Mid-tier manufacturers | RM2.1 billion through the NIMP Fund, KWAP Dana Pemacu and Khazanah MTC Fund for E&E, digital technology, aerospace and medical devices. Semiconductors: RM100 million strategic fund in Penang (Khazanah and InvestPenang) and RM1.2 billion from Khazanah and KWAP |
5.5 The Budget in Numbers
RM459.8 billion of federal spending (RM376.8 billion operating, RM83 billion development). The RM510 billion figure you may see quoted also counts GLIC, statutory-body and public-private spending. Fiscal deficit target 3.3% of GDP; GDP growth forecast 4.2% to 5.2%.