Calculate Take-Home Salary in Malaysia (With Examples)take-home salary

Sometimes, employees get confused between net salary and take-home salary, but they actually mean the same thing.

Simply put, take-home salary is the final amount employees receive after all mandatory and other deductions.

This time, we’ll break down how take-home salary is calculated, what deductions apply, and provide examples to help you understand the process better. Let’s get started!

What is a Take-Home Salary?

As mentioned above, take-home salary is the final amount employees receive after all deductions are subtracted from their gross salary.

It is also called net salary because it reflects how much employees can actually use for their daily expenses.

Unlike gross salary, which includes basic pay, allowances, and bonuses, take-home salary is what remains after taxes, EPF, SOCSO, and other deductions are made.

Take Home Salary vs Gross Salary vs Net Salary

Salary Type	Description
Gross Salary	The total salary before any deductions. It includes the base salary, allowances, bonuses, and other earnings.
Net Salary	The salary after all deductions such as EPF, SOCSO, EIS, and PCB are made. Also known as take-home salary.
Take-Home Salary	Another term for net salary, referring to the actual amount employees receive after deductions.

Take Home Salary Components

To accurately calculate take-home salary, employers must first understand what is included in an employee’s total earnings and what needs to be deducted.

What is Included in Take-Home Salary?

Take-home salary is made up of:

Basic salary: The fixed amount agreed upon in the employment contract.
Allowances: Additional payments such as transport, meal, and housing allowances. These may or may not be taxable, depending on government policies.
Bonuses and overtime pay: Extra earnings employees receive for their performance or extra working hours.

What is Deducted from Salary?

Several statutory deductions must be subtracted from an employee’s earnings before they receive their take-home salary:

EPF (Employees Provident Fund): Employees contribute 11% of their salary to EPF, while employers contribute 12% or 13% depending on the salary amount.
SOCSO (Social Security Organisation): Both employees and employers contribute to SOCSO (between 0.5% to 1.75%), which provides coverage for workplace injuries and disabilities.
EIS (Employment Insurance System): A 0.2% contribution from both employers and employees to support job loss benefits.
PCB (Potongan Cukai Bulanan): Monthly tax deductions based on the employee’s salary and tax bracket.

These deductions significantly impact an employee’s take-home salary, so employers must calculate them correctly to avoid payroll errors.

How to Calculate Take-Home Salary in Malaysia

To determine an employee's take-home salary, start with the gross salary and subtract all mandatory deductions, including EPF, SOCSO, EIS, and PCB.

The final amount depends on the salary range, tax obligations, and other earnings.

Take a look at the step-by-step breakdown with examples for different salary groups below.

Example 1: B40 Income Group

Gross Monthly Salary: RM3,000
EPF Contribution: RM330 (11%)
SOCSO Contribution: RM13
EIS Contribution: RM6
PCB Deduction: RM0 (usually non-taxable)
Take-Home Salary: RM3,000 - RM330 - RM13 - RM6 = RM2,651

Example 2: M40 Income Group

Gross Monthly Salary: RM7,000
EPF Contribution: RM770 (11%)
SOCSO Contribution: RM30
EIS Contribution: RM14
PCB Deduction: RM200
Take-Home Salary: RM7,000 - RM770 - RM30 - RM14 - RM200 = RM5,986

Example 3: T20 Income Group

Gross Monthly Salary: RM15,000
EPF Contribution: RM1,650 (11%)
SOCSO Contribution: RM70
EIS Contribution: RM30
PCB Deduction: RM1,200
Take-Home Salary: RM15,000 - RM1,650 - RM70 - RM30 - RM1,200 = RM12,050

Employees earning higher salaries have higher tax deductions, meaning their take-home salary is reduced more significantly.

Taxable vs. Non-Taxable Income Components

Not all parts of an employee’s salary are taxed the same way.

Some earnings are taxable, meaning they are included when calculating income tax, while others are non-taxable, meaning they are not counted for tax purposes.

Taxable income: Basic salary, bonuses, commissions, overtime pay, and certain allowances (such as transport or meal allowances that exceed the tax-free limit).
Non-taxable income: Daily travel allowances (per diem), company-covered medical expenses, and reimbursements for work-related costs.

Identify which earnings are taxable and which are exempt when calculating an employee’s salary to avoid mistakes.

Impact of Bonuses and Overtime Pay on Take-Home Salary

Bonuses and overtime increase an employee’s taxable income, which can lead to higher tax deductions under the PCB (monthly tax deduction) system.

For example:

If an employee’s monthly salary is RM5,000, and they receive a year-end bonus of RM10,000, their PCB for that month will be higher because their total taxable income has increased.
Overtime pay is also subject to EPF, SOCSO, and PCB deductions, meaning employees may receive less than expected after these deductions are applied.

Employers should explain how bonuses and overtime affect take-home salary so employees are aware of the deductions and can plan their finances accordingly.

Malaysia Take-Home Salary Calculator Tools

Manually calculating take-home salary for multiple employees can be time-consuming.

Fortunately, there are online tools that help businesses estimate salaries accurately, such as:

PayrollPanda
LHDN PCB Calculator
Fincrew
BrioHR
Talenox Malaysia
Talent.com

Employers can minimize payroll errors and enhance salary calculation accuracy by using these tools.

An online salary calculator is easy to use and helps prevent miscalculations.

How to use these tools is simple. Generally, these are the steps:

Enter the employee’s gross salary, including basic salary, allowances, and bonuses if applicable.
Select the relevant deductions, such as EPF, SOCSO, and EIS contributions based on the employee’s salary range.
Apply PCB tax calculation. Usually, the tool will automatically compute tax deductions based on LHDN’s tax rates.
View the take-home salary result.

Frequently Asked Questions (FAQ)

How much salary do I take home after tax in Malaysia?

Take-home salary is the gross salary minus EPF, SOCSO, EIS, and PCB deductions. The final amount depends on the employee’s income and tax bracket.

Does my employer contribute to my EPF and SOCSO?

Yes, employers contribute 12% or 13% to EPF and varying amounts to SOCSO (between 0.5% to 1.75%), depending on the employee’s salary.

How to calculate basic salary?

Basic salary is the fixed amount agreed upon between the employer and employee, before allowances, bonuses, or deductions.

Is salary calculated for 26 days or 30 days in Malaysia?

This depends on company policy. Some calculate salary based on 30 days, while others use 26 days (excluding rest days).

How much is salary deduction in Malaysia?

Deductions include EPF (11%), SOCSO (between 0.5% to 1.75%), EIS (around 0.2%), and PCB (varies by income bracket).

What is a synonym for take-home salary?

Take-home salary is also called net salary.

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