Budget 2027 was tabled on 9 October 2026. For most salaried Malaysians the headline is good news: a bigger individual relief and lower rates for chargeable income of RM70,001–RM150,000. Chargeable income above RM1 million pays more. And several reliefs are widened, so some everyday purchases are worth a receipt from next year.
Sources: the official Budget 2027 speech and LHDN's current tax rates.
Individual relief goes from RM9,000 to RM12,000
Every resident taxpayer gets this automatically. It is the first increase since 2010 (The Star).
RM3,000 more relief does not mean RM3,000 back: it lowers chargeable income, so you save RM3,000 × your top rate.
New income tax rates: current vs Budget 2027
| Chargeable income (RM) | Current rate | Budget 2027 (proposed) |
|---|---|---|
| 70,001 – 100,000 | 19% | 18% |
| 100,001 – 150,000 | 25% | 24% |
| 150,001 – 400,000 | 25% | 25% |
| 400,001 – 600,000 | 26% | 26% |
| 600,001 – 1,000,000 | 28% | 28% |
| 1,000,001 – 2,000,000 | 28% | 30% |
| Above 2,000,000 | 30% | 30% |
These are marginal rates on chargeable income: each rate applies only to the part of your chargeable income inside that band. Bands below RM70,001 are unchanged.
The government puts the combined saving from the lower rates and higher relief at up to about RM1,600 a year (Malay Mail).
Worked examples
Assumptions: resident; chargeable income before the new RM3,000 extra relief; no other relief changes; our estimate.
| Chargeable income | From the lower rates | From the extra RM3,000 relief | Less tax (about) |
|---|---|---|---|
| RM90,000 | ≈RM200 | ≈RM540 (RM3,000 × 18%) | ≈RM740 |
| RM150,000 | ≈RM800 (RM300 + RM500) | ≈RM720 (RM3,000 × 24%) | ≈RM1,520 |
Above RM1 million: 30% starts earlier
The speech raises the rate for income above RM1 million to 30%. LHDN's rate schedule works on chargeable income, so chargeable income between RM1 million and RM2 million moves from 28% to 30%. Above RM2 million it stays at 30%.
Wider tax reliefs: start keeping these receipts in January
Budget 2027 widens these existing relief categories:
- Lifestyle: broadened to AI software subscriptions, pet vaccination expenses, and adopting pets from registered shelters.
- Medical: adds postpartum care services.
- Parents and grandparents: care relief covers all care-related expenses.
- Sports equipment: adds sports shoes.
- Education and skills training: covers all fields of study, and children's tuition.
- SOCSO: adds mandatory LINDUNG Kendiri contributions, plus extra relief of up to RM150 for voluntary LINDUNG 24 Jam and LINDUNG Kendiri contributions.
Proof to keep
- AI subscription: the monthly invoice or receipt in your name.
- Tuition: the official receipt from the tuition centre, naming the child.
- Sports shoes: an itemised receipt.
Keep each one on the day you get it, and keep it for seven years (see tax relief receipts to collect before 31 December). Where the shop offers an e-invoice, ask for one too; LHDN is starting to pre-fill reliefs from e-invoices (see do you need an e-invoice to claim tax relief?).
SnapBill stores your receipts and sorts them into categories, so your relief receipts are in one place when you file. Whether a purchase qualifies is still yours (or your tax agent's) to check. Start free on iPhone, Android or the web. Download SnapBill
Quick answers
When do the new rates apply?
They are expected to apply from YA 2027 (income earned in 2027, filed in 2028) once the Finance Bill passes. Your 2026 return uses the current rates.
Do I need to do anything to get the RM12,000 relief?
No. It is applied to every resident individual automatically.
Can I claim my AI subscription this year?
Not under the new rule. It is expected to apply from YA 2027, so it would count for subscriptions paid in 2027.
Who pays more?
People with chargeable income above RM1 million: the slice between RM1 million and RM2 million moves from 28% to 30%.
Disclaimer: This article is general information, not tax advice. Budget proposals take effect only once the Finance Bill is passed and LHDN publishes guidance; check the LHDN website before you rely on a detail. SnapBill is not a licensed tax advisor.