Malaysia Salary Tax Rate 2025 (YA 2024): How to Calculate, Tax Bracket

One of the first things employees check when they receive their payslip is how much tax has been deducted from their salary.

If there’s even a small miscalculation, they’ll definitely question their take-home pay.

That’s why, as an employer, you need to understand how salary tax works, from tax rates to deductions, so you can handle payroll smoothly and avoid any disputes.

Here’s everything you need to know about Malaysia's salary tax rate.

Who is Liable to Pay Tax on Salary?

Salary tax applies to employees earning a taxable income. But who exactly needs to pay?

Malaysian residents pay tax on any income earned in Malaysia and, in some cases, income from other countries if they bring it into Malaysia.

However, from 1 January 2022 to 31 December 2026, there is a tax exemption on foreign income remitted to Malaysia, except for business partnership income.

Foreign employees or non-residents only pay tax on their income in Malaysia. They do not pay tax on earnings from other countries.

To be considered a tax resident, an individual must be in Malaysia for:

At least 182 days in a calendar year OR
Less than 182 days, but at least 182 days across two consecutive years OR
At least 90 days in a year, with a history of staying in Malaysia for at least 90 days in three out of the last four years OR
The person has been a resident for three straight years and will continue to be one in the following year.

What is The Minimum Salary to Pay Income Tax in Malaysia?

Employees must pay tax if their chargeable income (after deducting tax reliefs) falls into the taxable range.

Those earning RM5,000 or less per year do not need to pay tax.
If an employee earns more than RM5,000, they may need to pay tax depending on their final taxable income after deductions.

How Salary Tax Works in Malaysia

Income tax in Malaysia is based on a progressive tax system, meaning the higher the salary, the higher the tax rate.

The tax is charged based on chargeable income, which means the amount left after deducting tax reliefs such as EPF contributions, SOCSO, EIS, and other eligible expenses.

For employees, tax is deducted every month through the Monthly Tax Deduction (MTD/PCB) system.

This ensures that employees do not have to pay a large lump sum when filing their annual tax return. Employers must calculate and deduct this tax before paying salaries.

Malaysia Income Tax Rate Brackets (YA 2024)

Category	Taxable Income (RM)	Calculation (RM)	Tax Rate (%)	Tax (RM)
A	0 - 5,000	On the First 5,000	0%	0
B	5,001 - 20,000	On the First 5,000 Next 15,000	1%	0 150
C	20,001 - 35,000	On the First 20,000 Next 15,000	3%	150 450
D	35,001 - 50,000	On the First 35,000 Next 15,000	6%	600 900
E	50,001 - 70,000	On the First 50,000 Next 20,000	11%	1,500 2,200
F	70,001 - 100,000	On the First 70,000 Next 30,000	19%	3,700 5,700
G	100,001 - 400,000	On the First 100,000 Next 300,000	25%	9,400 75,000
H	400,001 - 600,000	On the First 400,000 Next 200,000	26%	84,400 52,000
I	600,001 - 2,000,000	On the First 600,000 Next 1,400,000	28%	136,400 392,000
J	2,000,001+	On the First 2,000,000 Next Ringgit	30%	528,400

Source: https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-income/tax-rate/

For non-residents, the tax rate is 30% on all income earned in Malaysia.

Employer Responsibilities for Salary Tax

As an employer, it is your responsibility to:

Deduct Monthly Tax Deduction (MTD/PCB) before paying salaries.
File Form CP39 when submitting salary tax payments.
Submit tax payments before the 15th of the following month.
Keep accurate payroll records for audits.
Comply with tax rules to avoid penalties.

Failing to deduct and pay salary tax on time can lead to penalties, including fines, additional tax charges, or legal action.

Employee Responsibilities for Salary Tax

Employees must also play their part in handling their salary tax. They should:

Check MTD/PCB deductions to ensure the correct amount is deducted.
File an annual tax return (Form e-BE or e-B) to declare total income and claim deductions.
Keep records of payslips, tax relief receipts, and EPF/SOCSO contributions for tax filing.

Accurate tax filing benefits employees, as they may qualify for tax refunds if they have overpaid.

Tax Deductions & Reliefs for Salary Earners

Employees can reduce their chargeable income through tax reliefs and deductions. Some common deductions include:

EPF (Employees Provident Fund) & SOCSO (Social Security) Contributions
Medical & Education Expenses
Lifestyle Tax Reliefs for books, gadgets, gym memberships, and internet bills
Parental & Child Reliefs for medical expenses, school fees, or childcare

By maximizing tax reliefs, employees pay less tax, meaning lower deductions from their salary.

How to Calculate Salary Tax in Malaysia

Here’s a step-by-step example of how to calculate salary tax for an employee earning RM85,000 per year:

1. Determine chargeable income

Annual Salary: RM85,000

EPF Contribution: (RM9,350)

Other Tax Reliefs: (RM3,000)

Chargeable Income: RM85,000 - RM9,350 - RM3,000 = RM72,650

2. Apply tax brackets

RM72,650 taxed at 11% = RM7,700

Remaining RM2,650 taxed at 19% = RM503.50

Total Tax Payable: RM7,700 + RM 503.50 = RM8,203.50

Employees can use these online tools to check their exact tax amount:

Lembaga Hasil Dalam Negeri (LHDN)
Talent.com
SQL
FinCrew
iMoney
Jeremih Song

Frequently Asked Questions (FAQ)

How much salary is taxable in Malaysia?

Depending on deductions and reliefs, employees who earn more than RM5,000 per year may need to pay tax.

What is the PCB tax rate?

The PCB (MTD) tax rate follows the progressive tax brackets based on an employee’s salary.

How can employees reduce taxable income?

They can take advantage of tax relief, contribute to EPF and SOCSO, and claim deductions for education, medical, and lifestyle expenses.

What happens if an employer does not deduct PCB?

Failure to deduct and submit PCB can result in penalties, fines, or legal action by tax authorities.

How do employees check their tax number?

They can check their LHDN tax number by logging into the MyTax portal or visiting the nearest LHDN office.

At what salary do I pay tax in Malaysia?

Employees start paying tax if their chargeable income (after deducting reliefs and deductions) falls into a taxable bracket.

While the minimum taxable salary is RM5,001 per year, most employees effectively start paying tax when their annual salary exceeds RM34,000, as they will likely have reliefs that lower their chargeable income.

What is the income tax rate for foreigners in Malaysia?

Non-residents are taxed at 30% on all income earned in Malaysia.

How much tax is in Malaysia for foreigners?

Foreigners working in Malaysia are subject to a flat tax rate of 30% if they are classified as non-residents (staying in Malaysia for less than 182 days in a year). If they qualify as tax residents, they follow the progressive tax rate based on their income level.

Is Malaysia salary tax-free?

No, salary tax applies based on the progressive tax system, but individuals earning below RM5,000 annually are exempt.

As an employer, you don’t want salary tax to be a problem for your employees or for your business.

Miscalculations, late payments, or failing to deduct Monthly Tax Deductions (MTD/PCB) can lead to frustrated employees and penalties from the tax authorities.

So, ensure you understand how Malaysia’s tax works. Stay informed, stay compliant, and keep your business running smoothly!

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