Budget 2027 update. Budget 2027, tabled on 9 October 2026, proposes these relief changes from the year of assessment 2027:
- Individual and dependent relatives: from RM9,000 to RM12,000.
- Lifestyle (limit stays at RM2,500): adds AI software and app subscriptions for you, your spouse or child, and pet care — adoption from a registered animal shelter, and registered vet services for vaccination and spaying or neutering. Fees for skill improvement or personal development courses would move out of this relief into a renamed Education and Skills Training Fees relief.
- Sports (limit stays at RM1,000): adds sports shoes, up to RM300.
- Medical (renamed Health and Well-being, limit stays at RM10,000): adds postnatal care by a confinement centre or qualified individual, up to RM3,000, and breastfeeding equipment for children aged 2 and below, paid by you or your spouse, up to RM1,000.
A change from the year of assessment 2027 covers income earned in 2027 and is claimed in the return filed in 2028. These are proposals until a Finance Act is passed, so this guide still uses LHDN’s current relief list, including the RM9,000 individual relief.
Source: Budget 2027 tax measures, Appendices 2, 4, 5, 6 and 7. All the Budget 2027 changes we track: Budget 2027 Malaysia: what changed, and when it applies.
Walaoeh, it is December already! Before you go for your holiday, have you checked your Income Tax?
Most Malaysians only panic in March or April when the LHDN (Lembaga Hasil Dalam Negeri) portal opens. But by then, it is TOO LATE. Why? Because Income Tax Relief Malaysia 2026 is based on what you spent from 1st Jan 2025 to 31st Dec 2025.
If you want to claim tax relief for a new iPhone, a medical check-up, or buying books, you must do it BEFORE 31st December. Whether that receipt needs to be an e-Invoice depends on what you are claiming — LHDN’s rules on that are covered separately.
Are you paying too much tax? Can you get a Tax Refund (Duit Raya) from the government? In this ultimate Income Tax Relief Malaysia 2026 guide, we provide the complete list of reliefs, explain the difference between PCB vs Income Tax, and teach you how to file your taxes via MyTax without getting a penalty.
Correction — updated 25 September 2026
This guide previously listed the education and medical insurance relief at up to RM 3,000. On LHDN’s tax relief list, the limit for the year of assessment 2025 is RM 4,000 (item 19); RM 3,000 was the limit for the year of assessment 2024. The life insurance limit of RM 3,000 is unchanged.
The relief list also put sports equipment and gym membership inside the RM 2,500 lifestyle relief. On LHDN’s list for the year of assessment 2025 they are a separate lifestyle relief of up to RM 1,000 (item 10), on top of the RM 2,500 (item 9). It also listed fertility treatment at up to RM 6,000 on its own; fertility treatment shares one RM 10,000 limit with serious diseases, vaccination and dental treatment (item 6).
The RM 0 tax example deducted RM 4,950 for EPF (11% of RM 45,000). The EPF relief is capped at RM 4,000 (item 17), so the example now uses RM 4,000 and the chargeable income becomes RM 18,500; the tax payable is still RM 0 after the RM 400 rebate (LHDN’s tax rate and rebate pages).
25 September 2026: the penalty figures were wrong. Filing late is not an instant 10% penalty: LHDN’s guideline GPHDN 3/2020 sets the section 112(3) late-filing penalty at 15% of the tax payable up to 12 months late, 30% up to 24 months and 45% after that. The 10% is a separate increase for paying tax late (section 103(3), LHDN’s offences and penalties page). The fine of RM 200 to RM 20,000 or up to 6 months in jail is under section 112(1), not 112(3); the section 112(3) penalty of up to three times the tax payable applies when there is no prosecution, not on top of it (Income Tax Act 1967). The audit penalty was given as 45% to 100%; under LHDN’s Tax Audit Framework of 15 March 2025 it is 15% of the tax undercharged for a first offence, 30% and 45% for repeat offences, and 100% for wilful default.
Table of Contents
Must I file?The reliefsGet it backQuick Answer: Do I Need to File Tax? (The RM 34,001 Rule)
Before we dive into the complex stuff, let’s answer the most basic question: “Do I need to report my income?”
YES, you must file tax if:
- Your Annual Income (including bonus/allowance) exceeds RM 34,001 (after EPF deduction).
- You have a registered Tax File Number (even if you don’t have to pay, you must file ‘Zero’).
- You own a business (even if it’s a small Shopee shop).
(Check our Average Salary Guide to see if you hit this threshold!)
The Ultimate Income Tax Relief List 2026
This is the most important section. Every Ringgit you claim here reduces your Chargeable Income. Maximize these to pay RM 0 tax! (Amounts follow LHDN’s relief list for the year of assessment 2025: money spent in 2025, claimed when you file in 2026.)
Category A: Individual & Family
- Individual Relief: RM 9,000 (Automatic for everyone).
- Husband/Wife (No Income): RM 4,000 (If your spouse doesn’t work).
- Child Relief (Under 18): RM 2,000 per child.
- Child Relief (University/Diploma): RM 8,000 per child.
Category B: Lifestyle Relief (Max RM 2,500)
This is the most popular category. You can claim up to RM 2,500 for:
- Reading Materials: Books, E-books, Magazines (Receipt needed!).
- Personal Computer/Smartphone/Tablet: Must be for personal use. (Time to buy that iPad!).
- Skill Improvement Courses: Fees for a skill improvement or personal development course.
- Internet Subscription: Your Unifi/Time/Maxis Home Fibre bill (Monthly bill under your name).
Sports have their own extra RM 1,000, on top of the RM 2,500 above: sports equipment (badminton rackets, dumbbells), rental or entrance fees for sports facilities, registration fees for approved sports competitions, and gym membership or sports training — for yourself, your spouse, your children and your parents.
Category C: Medical & Health (High Value!)
Don’t waste these high limits.
- Medical Expenses for Parents: Up to RM 8,000 (Treatment in clinics/hospitals).
- Serious Disease (Self/Spouse/Child): Up to RM 10,000 (Includes Cancer, Heart Attack, etc.). This RM 10,000 is one shared limit: fertility treatment, vaccination, dental treatment and the check-up items below all come out of it.
- Fertility Treatment (Self/Spouse): Inside the same RM 10,000 — there is no separate RM 6,000 limit.
- Vaccination: Up to RM 1,000 (Flu, Covid, HPV), inside the same RM 10,000.
- Full Medical Check-up: Up to RM 1,000, inside the same RM 10,000. (Go do a blood test now!).
- Note: Check our Gov vs Private Hospital Guide for receipt tips.
Category D: Savings & Investment (The Money Makers)
- EPF (KWSP): Up to RM 4,000.
- Life Insurance: Up to RM 3,000.
- Education & Medical Insurance: Up to RM 4,000.
- SSPN (Education Savings): Up to RM 8,000. (Net deposit).
- PRS (Private Retirement Scheme): Up to RM 3,000.
(Pro Tip: If you max out your EPF, SSPN, and PRS, you can reduce your taxable income by RM 15,000 instantly! Read our EPF Dividend Guide to see why this is crucial.)
PCB vs Income Tax Payable: Are You Overpaying?
Many people think: “My boss already cut PCB (Potongan Cukai Bulanan), so I don’t need to do anything.”
WRONG!
- PCB: A monthly estimation deducted from your salary. It assumes you have minimal reliefs.
- Actual Tax Payable: The real tax amount after you claim all the Income Tax Relief Malaysia 2026 items listed above.
The Scenario:
- Your Boss cut total PCB: RM 2,000.
- After claiming Lifestyle (Phone), Medical (Checkup), and SSPN, your Actual Tax is only: RM 500.
- Result: LHDN owes you RM 1,500!
- Action: You MUST file e-Filing to get this Tax Refund credited back to your bank account. It’s like a bonus!
Filing the return itself now has its own dedicated, step-by-step walkthrough — the MyTax login, picking the right form, and the deadlines: e-Filing Malaysia 2026: Deadlines, Steps & Penalties. This page stays focused on what you can claim.
5 Common Mistakes That Get You Penalized
Don’t play play with the Taxman. Here are common traps:
- Lost Receipts: You claimed RM 2,500 for a laptop but lost the receipt. If audited, you pay the tax plus a penalty: 15% of the tax undercharged for a first offence under LHDN’s current Tax Audit Framework, 30% and 45% for repeat offences, and 100% for wilful default.
- Solution: Scan/Photo all receipts and upload to Google Drive/Cloud. Thermal receipts fade in 6 months!
- Claiming Parents Relief Wrongly: You can only claim RM 8,000 for parents’ medical expenses, not for giving them pocket money.
- Mixing Life & Medical Insurance: The limits are separate (RM 3,000 for life insurance, RM 4,000 for education or medical insurance). Don’t lump them together. Check your policy statement.
- Forgetting SSPN: You deposited RM 8,000 in Jan but withdrew RM 5,000 in Dec. You can only claim the Net Deposit (RM 3,000).
- Late Filing: Filing late and paying late are two separate penalties. File Form BE after the deadline (30 April, with extra time to 15 May on e-Filing) and LHDN can charge a section 112(3) penalty of 15% of the tax payable if you are up to 12 months late, rising to 30% and then 45%. Pay the balance late and a separate 10% increase is added to the unpaid tax.
Strategy: How to Pay RM 0 Income Tax? (Legal Way)
Let’s say your Annual Income is RM 45,000 (RM 3,750/month). With just the Individual and EPF reliefs, you’d normally pay about RM 110 in tax. But with Income Tax Relief Malaysia 2026 strategy:
- Individual: – RM 9,000
- EPF (11% is RM 4,950, but the relief is capped at RM 4,000): – RM 4,000
- Lifestyle (Buy Phone): – RM 2,500
- SSPN (Save for future): – RM 8,000
- PRS (Retirement): – RM 3,000
Total Deductions: ~RM 26,500. Chargeable Income: RM 45,000 – RM 26,500 = RM 18,500. The first RM 5,000 is tax-free, the next RM 13,500 is taxed at 1% (RM 135), and the RM 400 rebate for chargeable income under RM 35,000 wipes that out, so your Tax Payable is RM 0. Plus, you have saved money in EPF, SSPN, and PRS for yourself!
Summary: File Early, Sleep Well
Taxes are part of adulting. Ignoring it won’t make it go away; it just adds penalties. Use the Income Tax Relief Malaysia 2026 list to plan your year-end spending now.
Walaoeh Action Plan:
- Check: Did you maximize the RM 2,500 Lifestyle relief? (Buy books/gadgets before Dec 31).
- Medical: Go for a full body check-up (RM 1,000 relief).
- Organize: Create a folder “Tax 2025” and snap photos of all receipts today.
Frequently Asked Questions (FAQ)
When is the deadline for Income Tax Filing 2026?
For individuals without business income (Form BE), the deadline is 30th April 2026. For those with business income (Form B), it is 30th June 2026. e-Filing usually gives a 15-day grace period, but don’t risk it.
Can I claim tax relief for buying a smartphone?
Yes. Under the Lifestyle Relief, you can claim up to RM 2,500 for the purchase of a personal computer, smartphone, or tablet. This is part of the Income Tax Relief Malaysia 2026 list.
How do I login if I forgot my LHDN password?
Go to the LHDN e-Filing Login page (MyTax) and click “Forgot Password”. You can reset it using your registered email or phone number. If that fails, you might need to visit the nearest LHDN branch or use the Customer Feedback form.
What is the penalty for not declaring income?
If you don’t file your return, section 112(1) of the Income Tax Act 1967 makes it an offence: on conviction, a fine of RM 200 to RM 20,000, imprisonment of up to 6 months, or both. If LHDN does not prosecute, section 112(3) lets it charge a penalty of up to three times the tax payable instead. LHDN’s guideline sets that penalty at 15% to 45% of the tax payable, depending on how late the return is.
About this guide. Written by an independent Malaysian and re-checked against official sources on a schedule. It is general information, not legal, tax, financial or medical advice — rules, fees and thresholds in Malaysia change, sometimes without notice. Where a decision affects your money or your rights, confirm with the official agency or a licensed professional before acting.