Malaysia Income Tax Basics (PCB & LHDN)
How Malaysian income tax works, what the tax brackets are, the top reliefs to claim, and how to file your return correctly.
Who Needs to Pay Income Tax?
Any Malaysian resident with an annual income above RM34,000 (after EPF deduction) is required to register with LHDN and file a tax return. If you earn below this threshold, you still need to register but may not owe any tax. Non-residents are taxed at a flat rate of 30%.
Malaysia's Tax Brackets
Malaysia uses a progressive tax system on chargeable income (income after reliefs). First RM5,000: 0%. RM5,001–RM20,000: 1%. RM20,001–RM35,000: 3%. RM35,001–RM50,000: 8%. RM50,001–RM70,000: 13%. RM70,001–RM100,000: 21%. RM100,001–RM250,000: 24%. RM250,001–RM400,000: 24.5%. RM400,001–RM600,000: 25%. RM600,001–RM1,000,000: 26%. RM1,000,001–RM2,000,000: 28%. Above RM2,000,000: 30%. Most salaried employees fall in the 1%–13% range.
What is PCB?
PCB (Potongan Cukai Berjadual) is the monthly salary deduction that your employer withholds as advance income tax. It is calculated using a formula provided by LHDN. If your PCB deducted throughout the year matches your actual tax, you owe nothing at filing time. If PCB was over-deducted, you get a refund.
Key Tax Reliefs to Claim
Always claim these reliefs to reduce your taxable income: Personal relief RM9,000 (automatic). EPF/Life insurance relief up to RM4,000 + RM3,000 respectively. Medical expenses for parents up to RM8,000. Lifestyle relief RM2,500 (books, internet, gadgets, courses) plus a separate sports relief of up to RM1,000 (gym membership, sports equipment). Child care fees up to RM3,000. Private retirement scheme (PRS) contributions up to RM3,000. These reliefs can significantly reduce your tax bill.
How to File Your Tax Return
File via MyTax portal (mytax.hasil.gov.my) by 30 April each year for employment income. The process is largely automated — your employer submits a form and your income is pre-filled. You just need to add your reliefs and check the figures. Late filing incurs a penalty of 10%–50% of the tax payable, so file on time even if you expect a refund.
Getting a Tax Refund
If your PCB deducted exceeds your actual tax, LHDN will issue a refund. The refund typically arrives within 30–90 days of filing, directly to your bank account registered on MyTax. To speed up refunds, ensure your bank account is updated on the MyTax portal before filing.
The 2026 tax brackets in full
Malaysian residents pay tax on chargeable income — what's left after reliefs — at progressive rates: the first RM5,000 at 0%, RM5,001-20,000 at 1%, RM20,001-35,000 at 3%, RM35,001-50,000 at 6%, RM50,001-70,000 at 11%, RM70,001-100,000 at 19%, RM100,001-400,000 at 25%, RM400,001-600,000 at 26%, RM600,001-2 million at 28%, and above RM2 million at 30%. Each rate only applies to the slice of income inside that band, so moving into a higher bracket never reduces your take-home pay. If your chargeable income is RM35,000 or less, you also get a RM400 rebate off the tax bill.
Worked example: RM5,000 a month
A single employee on RM5,000 a month earns RM60,000 a year. Subtract the automatic RM9,000 individual relief and RM4,000 EPF relief (11% of RM60,000 is RM6,600, but the EPF portion of the relief is capped at RM4,000), and chargeable income is RM47,000. Tax is RM0 on the first RM5,000, RM150 on the next RM15,000, RM450 on the next RM15,000 and RM720 (6%) on the last RM12,000 — RM1,320 for the year, or RM110 a month in PCB. Claim another RM2,500 lifestyle relief and RM3,000 for a life insurance premium and the bill falls to RM990. That is why keeping receipts pays.
Worked example: RM4,000 a month and the rebate
On RM4,000 a month (RM48,000 a year), chargeable income after the RM9,000 individual relief and RM4,000 EPF relief is exactly RM35,000. Tax on that is RM600, but because chargeable income is not above RM35,000 the RM400 rebate applies, leaving RM200 for the year — under RM17 a month. If the same person claims even a small extra relief, for example RM1,000 of lifestyle purchases, their tax drops to RM170. The rebate is why many people earning around RM3,500-RM4,000 a month pay very little or no income tax.
Deadlines, residency and penalties
Employees with only employment income file Form BE; the deadline is 30 April, with e-filing on MyTax accepted until 15 May. Those with business income file Form B by 30 June (e-filing until 15 July). You are generally a tax resident if you are in Malaysia for 182 days or more in a calendar year; non-residents pay a flat 30% with no reliefs. Late filing or late payment attracts penalties, so file on time even if you expect a refund. Keep receipts for seven years, because LHDN can ask you to support any relief you claimed.
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