EPF and life insurance tax relief 2026: how the RM7,000 really splits

One line on the form, two halves underneath

LHDN lists this as item 17, "Life insurance and EPF", restricted to RM7,000. It comes from section 49 of the Income Tax Act 1967, and the two halves come from different paragraphs of that section, each with its own ceiling. You cannot move unused room from one half to the other, except in the one direction explained below.

The RM4,000 EPF half fills itself

Only your own share counts, not your employer's. At 11% of salary, anyone earning more than about RM3,030 a month puts in more than RM4,000 a year, so for most salaried people this half is full before they lift a finger. The figure is in section E of your EA form, as our EA form guide shows line by line.

Anything above RM4,000 is simply lost. LHDN's own example is Mr Manaf, a private sector employee with RM36,000 of compulsory EPF in the year: he claims RM4,000 for it and not a ringgit more. Compulsory EPF does not overflow into the life half, however large it is.

The RM3,000 half: life cover first

This half takes life insurance premiums and family takaful contributions on a policy on your own life or your spouse's. Pay RM2,000 a year for a policy and RM2,000 is claimed; pay RM5,000 and RM3,000 is claimed. LHDN's notes expressly exclude a policy on your child's life for YA 2025, which changes for YA 2026 (see below). Parents' policies are not on the list in either year.

Two things that look like they belong here do not. A medical card or a medical rider goes on the separate RM4,000 education and medical insurance line, which our medical insurance guide covers. And Private Retirement Scheme contributions have their own RM3,000 relief, item 18, on top of this one.

Voluntary EPF top-ups: the part most people miss

The RM3,000 half also accepts an additional voluntary contribution to EPF. LHDN's Form BE notes say voluntary contributions are allowable for the self-employed, for pensionable civil servants and for other employees, so a salaried worker qualifies too. LHDN's Manaf example shows how it works: he also put RM6,000 into EPF voluntarily, and it was filed on the RM3,000 half, where it got nothing only because his RM3,600 of takaful had already filled that half.

That is the practical rule. If your life premiums are below RM3,000, the gap can be filled with a voluntary EPF contribution paid in the same calendar year. If your premiums are RM3,000 or more, a top-up still grows your retirement savings, but it adds no relief. Keep the KWSP statement that shows the amount as a voluntary contribution, separate from your payroll EPF, and pay it well before 31 December.

Which case are you?

LHDN's notes carry an example for each. Madam Charlene, a consultant, puts RM12,000 into EPF voluntarily and has no life policy: she claims the full RM7,000, RM4,000 plus RM3,000. Saiful, a pensionable civil servant with no EPF, pays RM10,000 of premiums and claims RM3,000; the extra relief pensionable officers used to get was removed from YA 2023. Madam Sally, also pensionable, adds RM6,000 of voluntary EPF to RM1,800 of premiums and reaches the full RM7,000. If you are self-employed, remember that your own EPF is a personal relief on this line, never a business expense in your accounts.

New for YA 2026: a policy on your child's life

For YA 2026, the year you file in 2027, the Finance Act 2025 extends the RM3,000 half to a life policy on your child's life. A child here means unmarried and either under 18, or 18 and over in full-time education, or serving under articles or indentures towards a trade or profession, or disabled, with no age limit. There is no end date on the change.

Two cautions. It does not reach back: premiums you paid in 2025 for your child's policy are not claimable on the YA 2025 return. And it does not raise the ceiling: your child's premiums share the same RM3,000 with your own. LHDN has not yet published the YA 2026 form notes, so check them when e-Filing opens on 1 March 2027.

A worked example: filling the gap with RM600

Chee Keong earns RM90,000 a year and files separately from his wife. His compulsory EPF is RM9,900, so the EPF half is full at RM4,000. After that and his other reliefs, his chargeable income is RM74,000 before he claims anything on the life half, and his top slice is taxed at 19%. In 2026 he pays:

The full RM3,000 cuts his tax by RM570. His own policy is worth RM285, Ethan's policy another RM171 under the YA 2026 rule, and the RM600 top-up RM114. The top-up is not about the tax alone: the RM600 stays in his own EPF account. A RM1,000 top-up would have saved nothing extra, because only RM600 of room was left.

Where the numbers come from

Your EPF share comes from your EA form. Life premiums come from the yearly premium statement your insurer or takaful operator sends; use the life premium figure it shows, not the total you paid if the policy also carries riders. Voluntary EPF comes from your KWSP statement. Everything counts by the year it was paid, so anything paid by 31 December 2026 goes on the YA 2026 return. Keep the documents for seven years.

On the YA 2025 Form BE this relief is item G17, and the same relief appears on Form B. Our e-BE walkthrough shows where the relief screen sits. The tax relief checklist lists every other relief for YA 2025 and YA 2026, and the free tax calculator shows what RM3,000 is worth at your own income.