B40, M40, and T20 in Malaysia: Income Groups & Classification (2025)

Salaries in Malaysia have changed over time, but so have living costs.

A salary that once provided financial security may no longer be enough, and employees are feeling the pressure.

To track these shifts, the Malaysian government categorizes households into B40, M40, and T20, with a newer subgroup, T15, for the highest earners.

These classifications help measure economic progress, distribute subsidies, and guide businesses in setting fair wages.

But here’s why it matters for employers: understanding these income groups helps businesses design competitive salary packages, relevant job perks, and hiring strategies that align with employee expectations.

A company that pays attention to income trends can attract better talent and retain employees more effectively.

Let’s explore how these classifications work and how they impact businesses.

What is B40, M40, T20, and T15?

The Malaysian government divides households into income groups to track economic conditions and decide who needs financial aid.

Income Group	What It Means	Monthly Income (RM)	Median Income (RM)
B40 (Bottom 40%)	Low-income households	Up to RM5,249	RM3,440
M40 (Middle 40%)	Middle-income households	RM5,250 - RM11,819	RM7,694
T20 (Top 20%)	High-income households	RM11,820 and above	RM15,867
T15 (Top 15% of T20)	The wealthiest earners	RM13,000 and above	RM19,781

This income group is essential for establishing fair salaries based on employee needs, identifying which benefits are most valued by different workers, and assisting businesses in maintaining competitiveness within their hiring and retention strategies.

Now, let’s take a closer look at each group.

What is B40 in Malaysia?

B40 households earn the least in Malaysia, with monthly incomes below RM5,249. Many work in lower-paying jobs and struggle with high living costs.

Their biggest challenges include:

Low wages, making it difficult to afford daily necessities
High transportation and housing costs, consuming most of their earnings
Heavy reliance on government aid for healthcare, education, and food

B40 workers are commonly found in labor-intensive and service-based jobs:

Retail & Hospitality (cashiers, waiters, cleaners)
Manufacturing & Construction (factory workers, laborers, technicians)
Agriculture & Plantation (farmers, plantation workers)

Since B40 employees often live paycheck to paycheck, employers can support them by:

Paying fair wages that match the cost of living
Offering transport or meal allowances to ease daily expenses
Providing skills training to help them move into better-paying roles

What is M40 in Malaysia?

M40 employees earn between RM5,250 and RM11,819, placing them between financial security and struggle.

While they make more than B40, many still feel the pressure of rising living costs.

Expenses like housing, childcare, and education take up a big portion of their income, and they often have home and car loans to pay off.

Additionally, many M40 workers no longer qualify for government subsidies, making financial planning even tougher.

They usually hold mid-level jobs across industries:

Education & Healthcare (teachers, nurses, mid-level medical staff)
Finance & Administration (accountants, HR executives, supervisors)
Technology & IT (junior programmers, IT support)

Unlike T20, M40 employees are focused on stability rather than luxury. To support them, employers should offer practical benefits, such as:

Flexible working hours to balance work and family life
Medical insurance and childcare support to reduce expenses
Career development programs to help them grow financially

What is T20 in Malaysia?

T20 employees are among the top 20% income earners, making over RM11,820 per month. They often hold leadership and specialist roles across industries, such as:

Banking & Investment (fund managers, investment analysts)
Technology & IT (senior software engineers, data scientists)
Healthcare (specialist doctors, surgeons)
Corporate Leadership (CEOs, CFOs, business owners)

Unlike B40 and M40, T20 employees spend more on lifestyle and investments.

Their spending often includes luxury homes, high-end vehicles, overseas vacations, and private education for their children.

To attract and keep T20 talent, employers need to offer exclusive perks, such as:

Performance bonuses and stock options
Leadership training and executive coaching
Better work-life balance through remote or flexible work options

This group is highly competitive and selective about job opportunities. So, ensure businesses offer great benefits just as important as salary.

What is T15?

T15 is a new category within the T20 group, representing the top 15% of Malaysians who earn more than RM13,000 per month.

This group includes business owners, senior executives, and highly specialized professionals like surgeons, lawyers, and consultants.

Unlike other income groups, T15 employees are affected by higher tax rates, reduced subsidies, and luxury taxes on big purchases.

When hiring from this group, employers should consider tax-efficient salary structures, performance-based bonuses, and executive perks to attract and retain them.

Why is it important for employers to understand household income classification in Malaysia?

Salaries reflect purchasing power, standard of living, and financial security.

A B40 employee earning RM3,000 in Kuala Lumpur, where rent and food prices are high, struggles far more than someone earning the same amount in a smaller town.

Meanwhile, a T20 executive in Penang might have different spending priorities compared to one in the capital.

For employers, understanding income groups helps in:

1. Salary Structuring

Knowing where an employee stands in the income classification helps companies set competitive pay scales.

Offering a wage that barely meets the cost of living could result in high turnover, while a well-structured salary improves job satisfaction and loyalty.

2. Workplace Benefits

Different income groups have different priorities.

B40 employees may value transport allowances and meal subsidies, while M40 workers appreciate health insurance and flexible work hours.

Meanwhile, T20 employees seek for bonuses, stock options, and career development programs.

3. Employee Productivity

Financial stress affects job performance. If employees constantly worry about rising living costs, loan payments, or lack of savings, their focus at work will suffer.

Employers who offer meaningful financial support see higher engagement and productivity.

Will the Household Income Classification change from time to time?

Yes, and it already has multiple times.

The income thresholds for B40, M40, and T20 are not fixed forever, they change with inflation, economic shifts, and policy updates.

For example, in 2016, the income range for B40 was below RM4,360, but by 2019, it had increased to below RM4,850, and now it’s below RM5,249.

The same adjustments apply to the M40 and T20 groups.

Recently, T15 was introduced as a new category within T20, highlighting the growing gap between high-income earners.

This means that businesses targeting high-level professionals need to rethink their salary structures to match rising expectations.

These changes also impact hiring strategies and salary benchmarking.

If an employee who was previously in M40 is now classified under B40 due to economic conditions, they might expect different benefits or salary adjustments.

Keeping up with these updates helps companies stay competitive and fair in their compensation approach.

How are the B40, M40, T20, and T15 categories determined?

The Malaysian government classifies households into B40, M40, T20, and T15 to monitor income distribution and economic conditions.

These classifications are determined by the Department of Statistics Malaysia (DOSM) through the Household Income and Basic Amenities Survey, conducted every two years.

Methodology Used by DOSM

DOSM collects data from households across Malaysia, including information on:

Total household income, including salaries, business earnings, and other forms of financial support.
Number of income earners within a household.
Household size and composition, including the number of dependents.

The classification is based on median and mean income levels, which shift over time due to inflation, economic growth, and changes in government policies.

Household vs. Individual Income Considerations

These income groups are determined based on total household earnings, not individual salaries.

For example, if a couple earns RM3,000 each per month, their combined household income of RM6,000 places them in the M40 category, even though individually, they earn what might be considered a lower salary.

This method accounts for the fact that financial burdens are shared within a household.

A single person earning RM4,000 per month may have higher disposable income than a family of five with a household income of RM8,000.

Key Economic Factors Influencing Classification

Several factors impact how these categories shift over time:

Inflation and cost of living. Higher prices can affect purchasing power and lead to adjustments in income classifications.
Economic growth. Rising GDP and business expansion create higher wages. This pushes income brackets upward.
Government policies. Tax changes, subsidies, and financial aid programs influence household finances and classification thresholds.

Because of these factors, the income thresholds for B40, M40, and T20 are updated every few years to reflect real economic conditions.

How much do Malaysians earn monthly by state?

Salaries and living costs vary significantly between different parts of Malaysia.

Generally, urban areas like Kuala Lumpur, Selangor, and Penang have higher income levels, while rural states like Kelantan and Perlis have lower earnings.

Source: Household Income and Basic Amenities Survey Report 2022, Department of Statistics Malaysia

Differences in Living Costs and Salary Expectations by Region

A salary of RM5,000 in Kuala Lumpur does not provide the same lifestyle as RM5,000 in rural Kedah.

Cities have higher rental costs, transportation expenses, and daily necessities, while rural areas tend to be cheaper.

This is why businesses in high-cost cities must offer higher salaries to stay competitive.

Employees compare job offers based on both salary and cost of living, meaning companies in expensive areas must adjust pay scales accordingly.

Salary Benchmarks for Major Cities vs. Rural Areas

Given these income variations, salaries must be adjusted based on whether the job is located in a high-income urban area or a lower-income rural district.

Urban areas (Kuala Lumpur, Selangor, Johor Bahru, Penang)

Higher salaries due to increased living costs. Jobs in finance, IT, healthcare, and corporate sectors offer salaries between RM4,500 – RM10,000+ for mid-level roles.

Companies may offer housing or transport allowances to offset high rental prices.

Semi-urban areas (Melaka, Negeri Sembilan, Terengganu, Sarawak, Sabah)

Moderate salaries with fewer high-paying opportunities. Salaries for mid-level professionals typically range from RM3,500 – RM6,000.

Lower living costs mean employees have slightly higher disposable income despite earning less.

Rural areas (Kelantan, Pahang, Perlis, Sabah interiors)

Lower salary expectations due to lower cost of living. Many B40 workers in agriculture, plantations, and informal work earn below RM3,500 per month.

Government subsidies and local business incentives may play a larger role in financial stability.

How much do B40, M40, T20, and T15 households earn?

The B40, M40, and T20 are broken down into smaller parts to get a clearer picture of how income is spread.

B40 is divided into B1, B2, B3, and B4. M40 has M1, M2, M3, and M4, while T20 is split into T1 and T2.

Income Group		Median Household Income (RM)	Mean Household Income (RM)	Income Threshold (RM)
B40	B1	2,012	1,941	Less than 2,560
B40	B2	3,034	3,018	2,560 – 3,439
B40	B3	3,875	3,874	3,440 – 4,309
B40	B4	4,764	4,771	4,310 – 5,249
M40	M1	5,770	5,782	5,250 – 6,339
M40	M2	6,979	6,989	6,340 – 7,689
M40	M3	8,523	8,536	7,690 – 9,449
M40	M4	10,552	10,577	9,450 – 11,819
T20	T1	13,475	13,585	11,820 – 15,869
T20	T2	20,776	25,719	15,870 and above

Changes in Income Levels Over the Years

Income classifications are not fixed forever, they change based on national income trends.

In 2019, the B40 threshold was RM4,850, but in 2022, it increased to RM5,249, showing that wages have risen over time.

However, despite salary increases, the cost of living has also grown, leading to financial strain for many middle-income households.

How Income Distribution Affects Hiring Strategies

B40 jobseekers prioritize stable salaries, transport allowances, and food subsidies.
M40 employees look for financial relief in the form of childcare, medical benefits, and flexible working arrangements.
T20 and T15 professionals seek career development, leadership training, and competitive bonuses.

How much do employers pay B40, M40, T20, and T15 workers?

Salary expectations depend on industry, experience, and skill level, but here’s a general benchmark based on income classification.

Income Group	Common Jobs	Estimated Salary Range (RM)
B40	Cashiers, waiters, factory workers	1,700 - 3,500
M40	Teachers, nurses, accountants	4,000 - 8,000
T20	Senior engineers, doctors, managers	10,000 - 20,000
T15	CEOs, consultants, business owners	15,000 and above

Industries Paying Higher Salaries to Certain Groups

Manufacturing, retail, and hospitality primarily employ B40 and lower M40 workers.
Finance, IT, and healthcare offer mid-range salaries suited for M40 professionals.
Investment, technology, and corporate leadership are among the highest-paying fields, attracting T20 and T15 workers.

The Role of Experience, Education, and Industry in Salary Determination

Salaries increase with experience and education, but industries also play a big role. For example:

An entry-level software engineer in tech may start at RM5,000+, even as a fresh graduate.
A senior nurse in healthcare may earn RM6,000+, despite having years of experience.
A bank manager in finance may earn RM12,000+, depending on their qualifications.

For employers, competitive salary structures matter.

Offering lower-than-market pay means struggling to attract skilled professionals, while fair wages help retain employees and reduce turnover.

FAQ

What is B40 and M40?

B40 (Bottom 40%) and M40 (Middle 40%) are income classifications used in Malaysia to categorize households based on their earnings.

B40 consists of households earning below RM5,249 per month. This group includes low-income earners who may rely on government subsidies and assistance programs.
M40 represents middle-class households earning between RM5,250 and RM11,819 per month. These households earn more than B40 but are often impacted by rising living costs, housing loans, and limited financial aid.

These classifications help the government target subsidies and financial assistance for lower-income households while guiding businesses in salary structuring.

What is the minimum salary for B40 workers?

There is no official minimum salary set specifically for B40 workers, but Malaysia's national minimum wage is RM1,500 per month. Many B40 workers earn between RM1,700 to RM3,500, depending on their industry and job type.

Employers hiring from the B40 group should consider fair wages, transport allowances, and career growth opportunities to help employees manage living expenses.

Are M40 employees eligible for government subsidies?

M40 employees may qualify for certain government subsidies, but their access is limited compared to B40 households.

Some assistance programs available for M40 include:

Income tax reliefs: Lower tax rates for those earning between RM35,000 and RM100,000 annually.
Stamp duty exemptions: Up to 100% for first-time home buyers purchasing properties worth RM500,000 or below.
Education assistance: Scholarships or tax reliefs for tuition fees.

However, M40 households earning closer to RM10,000 per month may receive fewer subsidies compared to those on the lower end of the scale.

Which jobs typically fall under T20 and T15 categories?

T20 and T15 employees earn above RM11,820 and RM13,000 per month, respectively. They typically hold leadership roles or work in specialized fields with high salary scales.

Common T20 jobs include:

Finance & Investment (investment analysts, fund managers)
Technology & IT (senior software engineers, data scientists)
Healthcare (specialist doctors, surgeons)
Corporate Leadership (CEOs, CFOs, business owners)

For T15, which represents the highest-income earners, jobs often include:

High-level executives in multinational corporations
Senior partners in law or consultancy firms
Prominent business owners and investors

How do employers use household income data for salary adjustments?

Household income data helps employers benchmark salaries, structure compensation packages, and design benefits that attract the right talent.

Key ways employers use this data:

Setting competitive salaries. Ensuring pay is aligned with market expectations based on income brackets.
Offering relevant benefits. M40 workers might prioritize health insurance, while T20 employees value performance bonuses and stock options.
Adjusting pay based on region. Salaries in Kuala Lumpur tend to be higher than in rural states due to cost of living differences.

Does income classification affect EPF and SOCSO contributions?

Yes, EPF (Employees Provident Fund) and SOCSO (Social Security Organization) contributions are based on an employee’s monthly salary, which correlates with their income classification.

EPF Contributions: Employees contribute 11% of their salary, while employers contribute 13% (for salaries RM5,000 and below) or 12% (for salaries above RM5,000). Higher earners contribute more due to their higher salaries.
SOCSO Contributions: Workers earning RM5,000 or below contribute under Category 1 (higher employer contributions), while those earning above RM5,000 contribute under Category 2 (lower employer contributions).

Income classification does not directly change EPF or SOCSO rules, but higher earners pay more in absolute terms due to their larger salaries.

How to check B40 status?

Employees can check their B40, M40, or T20 status based on their household income.

To verify B40 eligibility for subsidies:

Use the government's online systems, such as e-Kasih or PADU (Central Database Hub).
Refer to the Household Income Survey data by DOSM.
Check government subsidy portals like Bantuan Prihatin Rakyat (BPR) and Sumbangan Tunai Rahmah (STR), which use income data to determine eligibility.

Employers should also stay updated on income classifications to understand which employees qualify for assistance, helping them tailor benefits and salary discussions accordingly.

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