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 2025 Tax Brackets
Malaysia uses a progressive tax system. On the first RM5,000 of chargeable income: 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–RM400,000: 24%. Above RM400,000: 24.5%–28%. 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, gym, gadgets). 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.