B40, M40, and T20 Salary Range in Malaysia (2025 Update)

The Malaysian government often uses B40, M40, and T20 classifications when rolling out financial aid and tax policies.

These categories impact job opportunities, salary expectations, and employee benefits. This makes them crucial for businesses to understand.

By knowing how these income groups are structured, it helps in offering fair salaries and appropriate benefits that match employees’ financial realities.

Let’s dive into the latest B40, M40, and T20 salary range updates and what they mean for businesses in Malaysia.

Latest B40, M40, and T20 Salary Ranges in Malaysia (2025 Update)

The salary classifications for B40 (Bottom 40%), M40 (Middle 40%), and T20 (Top 20%) change over time based on income trends, cost of living, and economic conditions.

Here’s the latest household income breakdown in Malaysia:

Income Group	Median Income (RM)	Mean Income (RM)	Income Range (RM)
B40 (Bottom 40%)	3,440	3,401	Up to 5,249
M40 (Middle 40%)	7,694	7,971	5,250 - 11,819
T20 (Top 20%)	15,867	19,652	More than 11,820

Over the years, these numbers have shifted due to inflation, salary growth, and economic changes.

The median and mean incomes indicate that households in Malaysia are earning more compared to previous years, but costs of living have also increased.

List of Job Titles Fall Under B40, M40, and T20

Different industries and job positions fall within these salary ranges. Take a look at the common job roles that fit into the B40, M40, and T20 groups:

Income Group	Job Titles
B40	General workers, cashiers, security guards, delivery riders, junior clerks, factory operators, retail assistants
M40	Executive roles, supervisors, teachers, nurses, junior engineers, sales representatives, administrative officers
T20	Senior managers, business owners, IT specialists, lawyers, doctors, corporate executives, experienced engineers

While job title does not always determine salary, employees in T20 roles often require specialized skills or higher education.

Meanwhile, B40 jobs tend to be labor-intensive or entry-level positions.

Factors Affecting the Income Classification in Malaysia

Several factors determine whether a household moves up or down in the B40, M40, and T20 groups. These include:

1. Inflation and Costs of Living

When everyday items like food, transportation, and housing become more expensive, it reduces a household’s spending power.

This means that a family that was in the M40 group before may now struggle financially, even if their salary remains the same.

2. Economic Growth and Employment Rates

When businesses do well, they create better-paying jobs, allowing more people to move from B40 to M40 or M40 to T20.

But during economic downturns, salary freezes and job losses can push some households into lower-income groups.

3. Government Policies and Taxation

Government policies, including tax reliefs, wage subsidies, and financial aid, influence how much disposable income people have.

B40 households receive more assistance, while T20 households pay higher taxes.

4. Household Size and Location

Where a person lives also plays a role.

A household earning RM8,000 in Kuala Lumpur may struggle due to higher living costs, while the same income in rural Kelantan may provide a comfortable life.

Similarly, a family with many dependents may feel financially stretched, even with an M40 salary.

How B40, M40, and T20 Classification Affects Employees and Employers

Income classification impacts how employees manage their earnings and what they expect from their jobs.

Here’s how B40, M40, and T20 classifications affect employees and what businesses can do to support them.

B40 Employees

This group is likely to depend on government financial aid like Sumbangan Tunai Rahmah (STR) or affordable housing programs.

They may prefer jobs with benefits like free meals, transportation allowance, or medical coverage.

So, employers hiring from this group may attract workers by offering extra financial support or stable job security.

M40 Employees

M40 employees earn enough to sustain their families, but rising costs may still cause financial pressure.

In their career, they expect career progression, salary increments, and workplace benefits like tax incentives.

To help them, companies should focus on offering career development to retain these employees.

T20 Employees

Most of the time, T20 employees pay higher income taxes and receive fewer government subsidies.

Because of their experiences and position, they expect premium benefits, such as retirement plans, private healthcare, and stock options.

Employers looking to hire from this group need to offer competitive salary packages and growth opportunities.

B40, M40, and T20 Impact on Businesses and Employers

For businesses, these classifications are important because they affect salary expectations and employee retention.

1. Employees Know Their Worth

Many employees research salary trends and expect their pay to match their classification. Companies that offer below-market salaries may struggle to attract or keep workers.

2. Talent Retention Strategies

For B40 roles, offering extra benefits such as free meals, training, or transport assistance can make a significant difference in job satisfaction, helping employees feel more supported in their daily lives.

Meanwhile, for M40 employees, having a clear career progression plan and regular salary adjustments is key to keeping them motivated and committed to their roles.

As for T20 employees, competitive salaries, leadership opportunities, and performance-based incentives play a crucial role in retaining top talent who seek growth and rewards for their expertise.

3. Salary Benchmarking for Fair Compensation

To stay competitive and attract the best employees, businesses must review and adjust salaries regularly based on market trends.

B40, M40, and T20 Taxation in Malaysia

Taxes play a big role in how much employees actually take home from their salaries.

Since Malaysia follows a progressive tax system, those in the T20 category pay the highest tax rates, while B40 employees often receive tax reliefs and financial aid.

1. Income Tax Rates

Malaysia follows a progressive tax system, where those with higher incomes contribute a larger portion of their earnings to taxes.

Employees in the B40 category often earn below the taxable income threshold, meaning many of them either pay very little tax or none at all.

Meanwhile, employees in the M40 group are subject to moderate tax rates, with the percentage increasing as their income rises.

On the other hand, employees in the T20 category fall into the highest tax brackets, making them the largest contributors to the country’s income tax revenue.

2. Tax Reliefs and Deductions

To reduce financial burdens, the government provides various tax reliefs that benefit employees differently based on their income group.

B40 employees receive the most reliefs, which often come in the form of government subsidies for healthcare, education, and housing.

Employees in the M40 group still qualify for some tax benefits, but they receive fewer government subsidies compared to those in the B40 group.

However, for those in the T20 category, tax relief options are more limited, as they fall into the highest tax bracket and contribute the most to national tax collection.

3. Employer Responsibilities in Payroll Taxation

Employers must deduct and submit taxes correctly through Monthly Tax Deductions (MTD/PCB) to LHDN.

They are responsible for filing tax forms and updating payroll based on tax changes. Mistakes can lead to penalties or fines.

FAQ

How does Malaysia define B40, M40, and T20 salary ranges?

These are income classifications used by the Malaysian government. B40 represents the lowest 40% of earners, M40 is the middle 40%, and T20 is the top 20%.

How often do B40, M40, and T20 salary thresholds change?

The Department of Statistics Malaysia (DOSM) reviews these categories every few years to reflect changes in income levels and living costs.

What financial assistance is available for B40 employees?

B40 employees can receive government assistance, including Sumbangan Tunai Rahmah (STR), PeKa B40 healthcare benefits, and affordable housing programs.

Do employers need to adjust salary structures based on these classifications?

While not required, companies that follow market salary trends can attract and retain employees more effectively.

How does the B40, M40, and T20 classification affect personal income tax?

Since Malaysia follows a progressive tax system, higher-income groups pay higher tax rates.

B40 earners often fall below the taxable threshold, so they pay little to no tax and receive more subsidies.

M40 employees face moderate tax rates and qualify for some tax reliefs. T20 earners pay the highest tax rates with fewer tax benefits and no government subsidies.

The way salaries are structured in Malaysia affects hiring, payroll planning, taxation, and employee satisfaction.

Businesses that understand B40, M40, and T20 salary classifications can better manage salary expectations, provide appropriate benefits, and attract top talent.

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