What Is the Malaysia Personal Income Tax Rate?
Malaysia operates a progressive personal income tax system administered by the Inland Revenue Board of Malaysia (LHDN / IRBM). The Malaysia income tax rate for resident individuals ranges from 0% on the first RM5,000 of chargeable income to a maximum of 30% on income exceeding RM2,000,000, effective from Year of Assessment (YA) 2023 onwards.
Non-resident individuals are taxed at a flat rate of 30% on all taxable income. Understanding your applicable tax rate in Malaysia is essential for accurate financial planning, timely compliance, and optimal use of available reliefs.
What Are the Resident Personal Tax Rates in Malaysia for YA 2023 Onwards?
The following graduated scale of income tax rates applies to all resident individual taxpayers in Malaysia from YA 2023 onwards. Chargeable income is calculated after deducting all approved personal reliefs and rebates as permitted under the Income Tax Act 1967.
| Chargeable Income (MYR) | YA 2022 | YA 2023 Onwards | ||
| Tax Rate (%) | Max Tax Payable (MYR) | Tax Rate (%) | Max Tax Payable (MYR) | |
| 0 to 5,000 | 0 | 0 | 0 | 0 |
| 5,001 to 20,000 | 1 | 150 | 1 | 150 |
| 20,001 to 35,000 | 3 | 600 | 3 | 600 |
| 35,001 to 50,000 | 8 | 1,200 | 6 | 900 |
| 50,001 to 70,000 | 13 | 2,600 | 11 | 2,200 |
| 70,001 to 100,000 | 21 | 6,300 | 19 | 5,700 |
| 100,001 to 150,000 | 24 | 12,000 | 25 | 12,500 |
| 150,001 to 250,000 | 24 | 24,000 | 25 | 25,000 |
| 250,001 to 400,000 | 24.5 | 36,750 | 25 | 37,500 |
| 400,001 to 600,000 | 25 | 50,000 | 26 | 52,000 |
| 600,001 to 1,000,000 | 26 | 104,000 | 26 | 104,000 |
| 1,000,001 to 2,000,000 | 28 | 280,000 | 28 | 280,000 |
| Above 2,000,000 | 30 | No upper limit | 30 | No upper limit |
Note: YA 2023 rates apply equally to YA 2024, YA 2025 and YA 2026. The most significant changes from YA 2022 were rate reductions for middle-income brackets (RM35,000 to RM100,000) and modest rate increases for upper-income brackets (RM100,000 to RM600,000).
What Is the Tax Rate in Malaysia for Non-Resident Individuals?
Non-resident individuals are not entitled to the progressive tax rate structure applicable to residents. A non-resident is subject to a flat personal income tax rate of 30% on all chargeable income accruing in or derived from Malaysia, with no personal reliefs or rebates applicable. Certain categories of income, such as interest and royalties, may attract specific withholding tax rates distinct from the standard flat rate.
There are no local taxes on personal income in Malaysia beyond federal income tax administered by LHDN.
Who Qualifies for a Preferential 15% Tax Rate in Malaysia?
Certain categories of individuals qualify for a preferential personal tax rate of 15% on employment income in Malaysia, subject to specific eligibility criteria:
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Iskandar Malaysia Knowledge Workers
Qualified knowledge workers residing in Iskandar Malaysia and employed in qualifying activities with designated companies are taxed at 15%.
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Malaysia-China Kuantan Industrial Park (MCKIP)
Knowledge workers, including both Malaysian citizens and foreign nationals, residing within MCKIP in the East Coast Economic Region (ECER) and employed by designated companies are taxed at 15%.
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Returning Expert Programme (REP)
Approved individuals under the REP are taxed at 15% on employment income for five consecutive Years of Assessment. Applications must be submitted by 31 December 2027. This incentive is designed to attract Malaysian professionals from abroad back to contribute to the national economy.
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C-Suite/Key Position Holders (PENJANA Relocation Incentive)
Non-citizen professionals occupying C-suite or key positions in companies relocating to Malaysia under the PENJANA initiative are taxed at 15%, provided they earn a monthly salary of at least RM25,000, hold the position for a minimum of five consecutive years, and maintain tax residency in Malaysia throughout the incentive period.
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Forest City Special Financial Zone
Individual knowledge workers, including Malaysian citizens, employed within the Forest City Special Financial Zone are proposed to be taxed at 15% on employment income, subject to final legislative confirmation.
What Is the Dividend Tax Rate for Individual Shareholders in Malaysia?
With effect from 1 January 2025, a 2% dividend tax is imposed on individual shareholders, both residents and non-residents, including those holding shares through nominees, on chargeable dividend income received from resident companies. This tax applies only to individual shareholders whose annual dividend income exceeds RM100,000.
Additionally, from YA 2026, the government has proposed extending the 2% tax to profit distributions from Limited Liability Partnerships (LLPs) received by individual partners (resident and non-resident) where such distributions exceed RM100,000 per year, subject to final confirmation via the Finance Act.
How Can 3E Accounting Help You Navigate Malaysia Personal Income Tax?
Managing personal income tax in Malaysia demands a thorough understanding of applicable tax rates, eligible reliefs, residency rules, and annual filing obligations, all of which are subject to revision with each federal budget. An error in tax assessment or a missed relief can translate directly into excess tax paid or, worse, exposure to LHDN penalties.
3E Accounting Malaysia provides comprehensive personal tax advisory and compliance services for residents, expatriates, and non-residents subject to Malaysian tax. Our advisers stay current with every update to the personal tax rate structure, ensuring clients benefit from accurate assessments, timely filings, and fully compliant tax positions across all Years of Assessment.