Budget 2027 tax changes Malaysia: what it means for you.

What Budget 2027 announced for individual income tax

Everything below comes from the Ministry of Finance tax measures appendix, Langkah Cukai Belanjawan 2027, which is now published. These are Government proposals until Parliament passes the Finance Bill, usually in December, so details can still change. We also cross-checked two adviser summaries: EY Take 5: Malaysia Budget 2027 (9 Oct 2026) and MATA Sorotan dan Ulasan Belanjawan 2027 (9 Oct 2026).

In short, Budget 2027 changes four things for YA 2027: a bigger individual relief, two lower tax bands, and the top 30% rate starting earlier. The table below shows every band side by side.

The tax bands, YA 2026 against YA 2027

The YA 2026 column is the return you file in 2027. The YA 2027 column is what Budget 2027 announced for the year after. Green means you pay less, red means you pay more, and black means no change.

The YA 2027 column is the full schedule in Lampiran 1 of the appendix. We will confirm it against the Finance Bill when it is published.

Reliefs with a wider scope

Several existing reliefs are proposed to cover more from YA 2027 (Lampiran 3 to 9). The overall caps stay where they are.

• Parents and grandparents, RM8,000. Care at home, day care and residential care now covers all care costs, not only health care. No doctor's confirmation needed: keep the carer's written confirmation or work permit, plus receipts. The carer cannot be you, your spouse or your child.
• Medical, renamed Health and Well-being, RM10,000. Adds postnatal care by a confinement centre or any qualified carer, up to RM3,000. Breastfeeding equipment for a child aged 2 and below, paid by you or your spouse, up to RM1,000, moves inside this RM10,000 instead of being a separate relief.
• Education, renamed Education and Skills Training Fees, RM7,000. Your own studies in any field, Certificate to PhD, at a recognised institution or professional body in Malaysia. TVET upskilling for you or your spouse, up to RM3,000 (was RM2,000, you only). Up to RM2,000 for non-work skills courses for you or your spouse, or for courses, classes or tuition in STEM, arts, languages and religion for your children.
• Lifestyle, RM2,500. Adds AI software and app subscriptions for you, your spouse or your child, pet adoption from a registered animal shelter, and registered vet fees for your pet's vaccination and spaying or neutering. Hobby, language and religious courses move out to the education relief.
• Sports, RM1,000. Adds sports shoes, up to RM300.
• Domestic tourism, RM1,000. Extended for one more year, to YA 2027, because Visit Malaysia Year now runs into 2027.
• SOCSO. From YA 2027 the RM350 SOCSO relief also covers mandatory SKSPS (Lindung Kendiri) contributions in the 3 mandatory sectors: passenger transport, goods or food transport, and hawkers. A new extra relief of up to RM150 covers voluntary Lindung 24 contributions and Lindung Kendiri in the 17 non-mandatory sectors.

Form B, small-value assets (Lampiran 12). From YA 2027 the per-asset limit for a full capital allowance claim rises from RM2,000 to RM3,000, and the yearly cap for companies other than SMEs from RM20,000 to RM30,000. Whether the higher cap also applies to individuals in business awaits the Finance Bill text.

The RM400 rebate and the 2% dividend tax are not in the appendix, so treat both as unchanged.

Who it affects, and when

If you are filing your YA 2026 return in 2027, none of this touches it. That return covers income earned from January to December 2026, uses the RM9,000 individual relief and the current bands, and is due on the usual 2027 deadlines.

YA 2027 covers income earned from January to December 2027. You declare it between March and July 2028 (Form BE by May, Form B by July), so that is the first return where the Budget 2027 figures, once they are law, will appear.

Your payslip may feel it sooner. PCB, the monthly tax taken from your salary, follows LHDN's PCB rules for each year, which usually come out around December. If LHDN builds the announced relief and bands into the 2027 rules, take-home pay should rise from January 2027. Until those rules are published, that is a likely outcome rather than a promise.

What it saves you, in real ringgit

Mei Ling earns RM8,000 a month, RM96,000 a year, and claims only the reliefs every employee gets: the individual relief, EPF capped at RM4,000, and SOCSO plus EIS capped at RM350 as one combined line.

For YA 2026 her reliefs total RM13,350, leaving chargeable income of RM82,650. The first RM70,000 costs RM3,700 and the RM12,650 above it sits in the 19% band, adding RM2,403.50. Tax: RM6,103.50.

For YA 2027 as announced in Budget 2027, her reliefs total RM16,350 and chargeable income is RM79,650. The first RM70,000 still costs RM3,700, and the RM9,650 above it is taxed at 18% for YA 2027, adding RM1,737. Tax: RM5,437.

That is a saving of RM666.50 a year. The bigger relief accounts for part of it and the lower band rate for the rest.

On RM5,000 a month, RM60,000 a year, with the same automatic reliefs, chargeable income falls from RM46,650 to RM43,650 and tax from RM1,299 to RM1,119: a saving of RM180. Below RM70,000 of chargeable income the bands have not moved, so the extra RM3,000 of relief is the whole of the saving.

The Prime Minister put the saving at up to RM1,600. Here is where that comes from. Anyone whose chargeable income lands between RM150,000 and RM1,000,000 gets the full RM800 from the two rate cuts: 1 percentage point on RM30,000 plus 1 point on RM50,000. On top of that, the extra RM3,000 of relief is worth RM780 at the 26% rate, or RM840 at 28%. Someone earning RM500,000 with only the individual relief pays RM108,060 for YA 2026 and RM106,480 for YA 2027 as announced, RM1,580 less. Round it and you have the headline.

Want your own number for this year first? The free tax calculator runs on the YA 2026 rules you will actually file under.

The catch at the very top

Because the 30% rate is announced to start above RM1,000,000 instead of RM2,000,000, very high earners pay more under Budget 2027, not less. At the same chargeable income of RM1,500,000, tax is RM388,400 for YA 2026 and RM397,600 for YA 2027 as announced: RM9,200 more. For the same gross income the bigger relief narrows that to RM8,360. The cuts lower down and the earlier top rate cancel out at roughly RM1.08 million of chargeable income. Above that, it is a tax rise.

Other Budget 2027 changes that touch your wallet

These are not income tax reliefs, but they land on ordinary households, so they are worth knowing. Like everything above, they are proposals until Parliament passes the Finance Bill.

• Stamp duty on your first home (Lampiran 16). Malaysian citizens buying their first home already pay no stamp duty on the loan agreement and the transfer document for homes up to RM500,000. Budget 2027 keeps that and adds a second tier: for homes up to RM750,000, the first RM500,000 is fully exempt and the part above RM500,000 gets 50% off. It covers sale and purchase agreements signed from 1 January 2027 to 31 December 2030.
• Elderly care fees (Lampiran 34). From 1 January 2027 the service tax on elderly care drops from 8% to 6%. Fees of up to RM96,000 a year for each elderly person are fully exempt at a centre registered under the Care Centres Act 1993 or the Private Aged Healthcare Facilities and Services Act 2018. Above RM96,000, the 6% applies. If you pay these fees for a parent, they may also count towards the wider parents and grandparents relief above, once it is law.
• The SME tax cut is for companies, not your own business (Lampiran 11). From YA 2027, SME companies (Sdn Bhd) and LLPs with capital of RM2.5 million or less and yearly sales of up to RM50 million pay 14% on their first RM150,000 of chargeable income and 16% on the next RM450,000. If you run a business in your own name and file Form B, your profit is taxed at the individual rates in the table above, so this cut does not apply to you. You still get the bigger relief and the lower bands.
• Your employer paying off your PTPTN loan (Lampiran 30). Employers get a tax deduction for PTPTN repayments they make for full-time staff from 1 January 2027 to 31 December 2028, as long as they do not take the money back from you and you are not the business owner or related to your employer. The deduction is your employer's. The appendix does not say how the payment is treated on your side, and EY flags that the employee's own tax still needs to be considered. If your employer offers it, ask HR whether it will show as income on your EA form.

What to do now

File your YA 2026 return exactly as normal. Nothing in Budget 2027 changes the figures you enter on MyTax in 2027.

Keep receipts for the newly covered items you buy in 2027: postnatal care, care costs for parents and grandparents with the carer's written confirmation, sports shoes, your children's classes and tuition, AI subscriptions, pet adoption and vet fees. If the Finance Bill confirms them you will need that proof to claim. Our relief checklist covers what you can claim today, and the lifestyle relief guide explains the category that picks up AI subscriptions and pet adoption.

Check your first payslip of 2027 once LHDN publishes its PCB rules for the year. We will update this page when the Finance Bill is published.