Malaysia tax bands explained
If you live in Malaysia, your income is taxed in bands. There are 10 of them, and the rates go from 0% up to 30%. Only the part of your income that falls in a band is taxed at the rate for that band. Your whole salary is never taxed at one rate.
The rate table (from YA2023 onwards)
These are the rates for YA2023, YA2024, YA2025 and YA2026. Budget 2026 did not change any of the bands.
| Chargeable income (RM) | Rate | Tax on this band | Cumulative tax |
|---|---|---|---|
| 0 to 5,000 | 0% | RM 0 | RM 0 |
| 5,001 to 20,000 | 1% | RM 150 | RM 150 |
| 20,001 to 35,000 | 3% | RM 450 | RM 600 |
| 35,001 to 50,000 | 6% | RM 900 | RM 1,500 |
| 50,001 to 70,000 | 11% | RM 2,200 | RM 3,700 |
| 70,001 to 100,000 | 19% | RM 5,700 | RM 9,400 |
| 100,001 to 400,000 | 25% | RM 75,000 | RM 84,400 |
| 400,001 to 600,000 | 26% | RM 52,000 | RM 136,400 |
| 600,001 to 2,000,000 | 28% | RM 392,000 | RM 528,400 |
| Above 2,000,000 | 30% | Varies | RM 528,400 and above |
How it works, with an example
Say your chargeable income is RM80,000. That is your income after reliefs have come off. Here is how the tax is worked out:
- The first RM5,000 at 0% gives RM 0
- The next RM15,000 (RM5,001 to 20,000) at 1% gives RM 150
- The next RM15,000 (RM20,001 to 35,000) at 3% gives RM 450
- The next RM15,000 (RM35,001 to 50,000) at 6% gives RM 900
- The next RM20,000 (RM50,001 to 70,000) at 11% gives RM 2,200
- The last RM10,000 (RM70,001 to 80,000) at 19% gives RM 1,900
Total tax is RM 5,600. That works out at 7% of RM80,000. Your top band is 19%, but you only pay 19% on the last part of your income, not on all of it.
Marginal rate and effective rate
Your marginal rate is the rate on your last ringgit of chargeable income. Your effective rate is your total tax divided by your total income. The effective rate is always the lower of the two. The more you earn, the bigger the gap gets, because more of your income sits in the bands with lower rates.
Who pays these rates?
These rates are for people who are tax residents in Malaysia. You usually count as a resident if you spend 182 days or more in Malaysia in a calendar year. If you are not a resident, you pay a flat 30% and you cannot claim reliefs.
Where this comes from
LHDN publishes the rates here: hasil.gov.my: Tax Rate.