- Resident individuals pay 0% to 30% on chargeable income for year of assessment (YA) 2026, the same ten bands in force since YA 2023 (Ministry of Finance (MOF), Budget 2027 Tax Measures, Appendix 1, “Current Position”; Lembaga Hasil Dalam Negeri Malaysia (LHDN), Tax Rate page).
- Budget 2027 does not touch YA 2026. The cuts to 18% and 24% and the 30% rate from RM1,000,001 apply from YA 2027, and only once the Finance Bill is passed (MOF Tax Measures, Appendix 1).
- A higher bracket taxes only the ringgit inside that band. RM85,000 of chargeable income pays RM6,550 for YA 2026, an effective rate of 7.7%, not 19% of everything (our calculation from the YA 2026 table).
- Small and medium enterprise (SME) companies pay 15%, 17% and 24% in three bands; other companies pay 24%. The SME rates need paid-up capital of RM2.5 million or less and gross business income of RM50 million or less (LHDN, the Inland Revenue Board of Malaysia, company tax rate page). The company must also not control, or be controlled by, a company with paid-up capital above RM2.5 million, and no more than 20% of its paid-up capital can be foreign-owned (PwC Worldwide Tax Summaries).
- Non-resident individuals pay a flat 30% on chargeable income and cannot claim personal reliefs (LHDN, Introduction to Individual Income Tax).
Malaysia’s income tax brackets for year of assessment (YA) 2026 run from 0% to 30% for resident individuals, across ten chargeable income bands. Small and medium enterprise (SME) companies pay 15% on their first RM150,000 of chargeable income, 17% up to RM600,000 and 24% above that; other companies pay a flat 24%. Non-resident individuals pay a flat 30%.
Budget 2027, tabled on 9 October 2026, does not change any YA 2026 rate. Its rate cuts and the new 30% band above RM1 million apply from YA 2027, and they are proposals until Parliament passes the Finance Bill (not yet passed as at 5 November 2026). YA 2026 covers income earned in calendar year 2026, which individuals file in 2027.
This guide sets out every YA 2026 rate in one place, shows the calculation with worked examples, and labels each Budget 2027 figure with the year it applies to. For the full tax calendar around these rates, see our Malaysia business tax guide .
Individual income tax rates for YA 2026
Resident individuals pay income tax (cukai pendapatan) on a progressive scale: each slice of chargeable income is taxed at the rate for its band. Chargeable income is your total income after deductions and tax reliefs, and it is the figure the brackets apply to. The YA 2026 table below shows the tax on each band and the running total.
| Category | Chargeable income band (RM) | Rate | Tax on this band (RM) | Cumulative tax at top of band (RM) |
|---|---|---|---|---|
| A | 0 to 5,000 | 0% | 0 | 0 |
| B | 5,001 to 20,000 | 1% | 150 | 150 |
| C | 20,001 to 35,000 | 3% | 450 | 600 |
| D | 35,001 to 50,000 | 6% | 900 | 1,500 |
| E | 50,001 to 70,000 | 11% | 2,200 | 3,700 |
| F | 70,001 to 100,000 | 19% | 5,700 | 9,400 |
| G | 100,001 to 400,000 | 25% | 75,000 | 84,400 |
| H | 400,001 to 600,000 | 26% | 52,000 | 136,400 |
| I | 600,001 to 2,000,000 | 28% | 392,000 | 528,400 |
| J | Above 2,000,000 | 30% | 30% of the excess | 528,400 plus 30% of the excess |
Sources: MOF, Budget 2027 Tax Measures, Appendix 1 (“Current Position”, tabled 9 October 2026); LHDN, Tax Rate (table for YA 2023, 2024 and 2025, page last updated 26 June 2026).
As at 5 November 2026, LHDN’s own rate page labels this table “Year of Assessment 2023, 2024 & 2025”. The MOF Tax Measures document, published with Budget 2027, states the same ten bands as the current position, which is why they apply to YA 2026. Use the cumulative column to read your tax quickly: tax at any income equals the cumulative figure for the band below plus your band’s rate on the excess.
For individuals, a year of assessment matches the calendar year. YA 2026 is the year ending 31 December 2026 (LHDN, Tax Treatment Residents and Non-Residents), and you declare it in 2027: Form BE by 30 April 2027 if you have no business income, Form B by 30 June 2027 if you do (Income Tax Act 1967, section 77(1)). Our 2026 tax filing deadlines guide lists every date.
Resident sole proprietors and partners pay these same rates on their business income, because the profit is taxed as the owner’s personal income and declared on Form B. Converting to a Sdn Bhd (Sendirian Berhad, a private limited company) moves that profit to the company rates below.
How to calculate your income tax for YA 2026
Calculating income tax is a five-step sequence: income, reliefs, brackets, rebates, then credit for tax already paid. LHDN’s own tax computation follows the same order (LHDN, Tax Treatment Residents and Non-Residents). The Form BE filing guide shows where each figure goes in the e-Filing form.
Step 5 credits tax you have already prepaid. Monthly tax deduction (PCB, Potongan Cukai Bulanan) is taken from salary, and CP500 instalments are the bi-monthly instalment schedule LHDN issues to individuals with non-salary income. Our guide to PCB versus CP500 explains which one applies to you.
Step 1: Add up your total income
Add employment income, business profit, rental income and other taxable income for calendar year 2026. Subtract approved donations and gifts to reach total income.
Step 2: Subtract your tax reliefs
Deduct every relief you qualify for, starting with the RM9,000 individual relief for YA 2026. The result is your chargeable income.
Step 3: Apply the YA 2026 brackets
Take the cumulative tax for the band below your chargeable income, then add your band’s rate on the amount above that band’s floor.
Step 4: Subtract your tax rebates
Deduct the RM400 individual rebate if your chargeable income does not exceed RM35,000, plus any zakat or fitrah paid. The result is your tax payable.
Step 5: Subtract tax already paid
Deduct the PCB taken from your salary and any CP500 instalments paid during the year. A positive balance is payable to LHDN; a negative balance is a refund.
Worked examples: what you actually pay in YA 2026
Two worked examples show how the brackets, reliefs and rebate interact. Both use the YA 2026 resident table above; the arithmetic is ours.
Example 1: salaried employee, RM100,000 total income.
| Line | Amount (RM) |
|---|---|
| Total income | 100,000 |
| Less tax reliefs (RM9,000 individual relief plus RM6,000 of other reliefs) | (15,000) |
| Chargeable income | 85,000 |
| Tax on the first 70,000 (cumulative, band E) | 3,700 |
| Tax on the next 15,000 at 19% (band F) | 2,850 |
| Tax payable | 6,550 |
The employee sits in the 19% bracket, yet pays 7.7% of chargeable income (6,550 divided by 85,000). The 19% marginal rate matters for one decision: each extra RM1,000 of relief claimed saves RM190 of tax.
Example 2: lower-income taxpayer, RM30,000 chargeable income.
| Line | Amount (RM) |
|---|---|
| Tax on the first 20,000 (cumulative, band B) | 150 |
| Tax on the next 10,000 at 3% (band C) | 300 |
| Tax charged | 450 |
| Less individual rebate | (400) |
| Tax payable | 50 |
The RM400 rebate applies because chargeable income does not exceed RM35,000 (LHDN, Form BE 2025 Explanatory Notes, item B21). Someone at RM35,001 loses the whole rebate, so a few hundred ringgit of extra relief near that line is worth far more than its marginal rate suggests.
Company income tax rates for YA 2026: SME vs standard rate
The standard company tax rate in Malaysia is 24%. A resident SME company pays a lower rate on its first RM600,000 of chargeable income, in two bands.
| Chargeable income (RM) | SME company rate, YA 2026 | Other companies, YA 2026 |
|---|---|---|
| First 150,000 | 15% | 24% |
| 150,001 to 600,000 | 17% | 24% |
| Above 600,000 | 24% | 24% |
Sources: LHDN, Tax Rate of Company (table for YA 2023 to 2024, page last updated 25 June 2026); MOF, Budget 2027 Tax Measures, Appendix 11 (“Current Position”, 9 October 2026).
The SME rate is a status test, not a size label. A company qualifies only if all of these hold:
- paid-up capital of RM2.5 million or less (LHDN);
- gross business income of RM50 million or less (LHDN);
- it does not control, and is not controlled by, a company with paid-up capital above RM2.5 million (PwC Worldwide Tax Summaries, Malaysia corporate taxes, reviewed 16 June 2026, secondary source);
- no more than 20% of its paid-up capital is owned, directly or indirectly, by foreign companies or non-Malaysian citizens (same PwC source).
A limited liability partnership (LLP) with capital contributions of RM2.5 million or less and annual sales of RM50 million or less is taxed at the same SME rates (MOF Tax Measures, Appendix 11).
Example: SME company with RM800,000 chargeable income. Tax is RM22,500 on the first RM150,000 (15%), RM76,500 on the next RM450,000 (17%) and RM48,000 on the last RM200,000 (24%). The total is RM147,000, an effective 18.4%. The same profit in a company that fails the SME test pays RM192,000 at 24%, so the status is worth RM45,000 a year at this income level (our calculation).
For a company, YA 2026 covers the financial year ending in 2026. A company closing its accounts on 30 June 2026 reports that year under YA 2026 (LHDN, Tax Treatment Residents and Non-Residents). Deductions also lower the base the rate applies to; our guide to the ESG tax deduction for e-invoice costs covers one that SMEs can claim.
Your company’s revenue is also increasingly visible to LHDN. MOF’s Fiscal Outlook 2027, Section 2 credits the phased e-Invoice rollout for better company tax collection, citing more than 1.8 billion e-Invoice transactions as at end-August 2026, submitted by 265,379 taxpayers since implementation.
Non-resident tax rates in Malaysia
Non-resident individuals pay a flat 30% on income earned in Malaysia and cannot claim the personal reliefs that resident taxpayers use (LHDN, Introduction to Individual Income Tax, page updated 23 October 2026). The bracket table above does not apply to them. Some payments to non-residents, such as interest (15%) and royalties (10%), are instead taxed through withholding tax by the payer (LHDN, Withholding Tax, page updated 5 October 2026).
Residence is decided by physical presence, not nationality. Under Section 7 of the Income Tax Act 1967, the main test is 182 days or more in Malaysia in the calendar year, with further tests that link shorter stays to adjoining years (LHDN, Tax Treatment Residents and Non-Residents). A foreign employee who becomes resident moves from the flat 30% onto the progressive table, so the residence status often matters more than the rate itself.
Companies are taxed differently. PwC reports that non-resident companies pay 24% (PwC Worldwide Tax Summaries, reviewed 16 June 2026), and they cannot use the SME bands. Employers paying foreign staff should also check PCB treatment in our employer tax guide .
What Budget 2027 changes, and which year of assessment it applies to
Budget 2027 proposes new resident brackets from YA 2027, not YA 2026. Income you earn in 2026 is taxed on the YA 2026 table above, whatever happens to the Finance Bill. As at 5 November 2026, Parliament had not passed the Finance Bill that would enact these proposals.
| Chargeable income (RM) | YA 2026 rate | Proposed YA 2027 rate |
|---|---|---|
| 0 to 70,000 (bands A to E) | 0% to 11% | Unchanged |
| 70,001 to 100,000 | 19% | 18% |
| 100,001 to 150,000 | 25% | 24% (new band) |
| 150,001 to 400,000 | 25% | 25% |
| 400,001 to 600,000 | 26% | 26% |
| 600,001 to 1,000,000 | 28% | 28% |
| 1,000,001 to 2,000,000 | 28% | 30% |
| Above 2,000,000 | 30% | 30% |
Source: MOF, Budget 2027 Tax Measures, Appendix 1, effective “from the year of assessment 2027”.
The rate changes alone produce three outcomes (our calculation from Appendix 1):
- No change at RM70,000 or below. Bands A to E keep their YA 2026 rates.
- A saving of up to RM800 between RM70,001 and about RM1,040,000. RM100,000 saves RM300; any income from RM150,000 to RM1,000,000 saves RM800.
- More tax above about RM1,040,000. RM1,500,000 pays RM9,200 more and RM2,000,000 pays RM19,200 more, because the 30% rate starts at RM1,000,001.
Budget 2027 also proposes raising the individual relief from RM9,000 to RM12,000 from YA 2027 (Tax Measures, Appendix 2). MOF says the relief increase and rate cuts together give about 5 million taxpayers up to RM1,600 of extra disposable income (Budget 2027 speech, paragraph 31).
For companies, the proposal cuts the SME rates to 14% on the first RM150,000 and 16% on RM150,001 to RM600,000 from YA 2027; the 24% rate stays (Tax Measures, Appendix 11). Our RM800,000 SME example would pay RM141,000 instead of RM147,000. Everything else in the budget, from the minimum wage to capital allowances, is in our Budget 2027 summary .
Reliefs and rebates: what actually lowers your tax
A tax relief reduces chargeable income; a tax rebate reduces the tax itself. The two work at different points in the calculation, so their ringgit value differs.
A relief is worth the relief amount multiplied by your marginal rate. At the 19% bracket, a RM2,500 lifestyle claim saves RM475; at the 1% bracket, the same claim saves RM25. Our YA 2026 personal tax relief checklist lists every relief and its cap.
A rebate is deducted ringgit for ringgit from tax charged. Four rebates are available to resident individuals (LHDN, Rebates; Form BE 2025 Explanatory Notes, item B21):
- RM400 for an individual whose chargeable income does not exceed RM35,000;
- a further RM400 where that individual is also allowed the RM4,000 deduction for a spouse;
- zakat or fitrah paid, up to the amount of tax charged;
- the departure levy paid for umrah or another religious pilgrimage, limited to two trips in a lifetime.
Tax relief planning has a deadline. Claimable spending for YA 2026 must happen by 31 December 2026, because the year of assessment follows the calendar year.
Common mistakes when reading Malaysia’s tax brackets
Most errors with the income tax bracket table come from reading it as a single flat rate. Check your own calculation against these five:
- Applying your top bracket to all income. Only the slice above each band floor is taxed at that band’s rate.
- Using YA 2027 rates for 2026 income. The Budget 2027 table applies from YA 2027 and is a proposal until the Finance Bill is passed.
- Applying the bands to total income. The brackets apply to chargeable income, after reliefs.
- Missing the RM35,000 rebate line. Chargeable income of RM35,001 loses the full RM400 rebate.
- Assuming every small company gets SME rates. Controlling, or being controlled by, a company with paid-up capital above RM2.5 million, or more than 20% foreign ownership, removes the status.
For mistakes beyond the rates, read our guide to common SME tax filing mistakes .
Clean records keep your chargeable income accurate
Every bracket in this guide applies to one number: chargeable income. For a business, that number is only as reliable as the sales and purchase records behind it, and for businesses inside the e-Invoice mandate, those records are now the same ones LHDN receives through MyInvois.
JomeInvoice is a Malaysian e-invoicing middleware that connects your accounting, enterprise resource planning (ERP) or point-of-sale system to MyInvois, LHDN’s e-Invoice portal, without custom development on your side. Each invoice is submitted and validated from the system you already use, so the revenue in your books and the revenue LHDN holds stay in step when you prepare your tax computation.
JomeInvoice runs on AWS in Malaysia, and the support team works in Bahasa Malaysia, English and Mandarin. If year-end reconciliation between your books and MyInvois takes days, see how JomeInvoice handles it for your system .
Frequently Asked Questions
Q: What are the income tax brackets in Malaysia for YA 2026?
A: Malaysia’s YA 2026 income tax brackets are ten bands from 0% on the first RM5,000 of chargeable income to 30% above RM2,000,000. The middle bands are 19% for RM70,001 to RM100,000 and 25% for RM100,001 to RM400,000 [LHDN Tax Rate page; MOF Tax Measures, Appendix 1].
Q: What is the Sdn Bhd tax rate in Malaysia?
A: The Sdn Bhd tax rate is 24% for a standard company. A qualifying SME company pays 15% on the first RM150,000, 17% on RM150,001 to RM600,000 and 24% above that for YA 2026 [LHDN company tax rate page; MOF Tax Measures, Appendix 11].
Q: How do I calculate my chargeable income?
A: Subtract approved donations from your total income for the year, then subtract every tax relief you qualify for, starting with the RM9,000 individual relief. The remaining figure is chargeable income, and the tax brackets apply only to it.
Q: Do tax brackets change after Budget 2027?
A: Yes, but only from YA 2027. The proposal cuts 19% to 18%, adds a 24% band for RM100,001 to RM150,000 and applies 30% from RM1,000,001. YA 2026 rates are unchanged, and the proposals need the Finance Bill to pass.
Q: What is the income tax rate for non-residents in Malaysia?
A: The income tax rate for non-resident individuals in Malaysia is a flat 30% of chargeable income, with no personal reliefs [LHDN]. Residence generally requires 182 days or more in Malaysia in the calendar year under Section 7 of the Income Tax Act 1967.
Q: Who qualifies for the RM400 tax rebate?
A: A resident individual whose chargeable income does not exceed RM35,000 qualifies for the RM400 rebate. A further RM400 applies if that individual also claims the RM4,000 spouse deduction [LHDN, Form BE Explanatory Notes, B21].
Q: Is 30% the highest personal income tax rate in Malaysia?
A: Yes. For YA 2026, 30% is the top rate for resident individuals, on chargeable income above RM2,000,000, and the flat rate on the chargeable income of non-resident individuals. From YA 2027, the Budget 2027 proposal applies 30% from RM1,000,001.
File 2026 income on the 2026 table
Income earned in 2026 is taxed on the YA 2026 brackets: 0% to 30% for resident individuals, 15%, 17% and 24% for qualifying SME companies, 24% for other companies and a flat 30% for non-resident individuals. Budget 2027’s lower middle bands, earlier 30% band from RM1,000,001 and SME cuts start with YA 2027 and need the Finance Bill to pass. Run your numbers on the right table, make relief-qualifying spending by 31 December 2026, and confirm your position with a tax agent.
Your tax bill starts with clean sales and purchase records
See how JomeInvoice connects your billing system to MyInvois, so every invoice behind your chargeable income is validated.
Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. LHDN guidelines are subject to updates. Always refer to the latest official LHDN e-Invoice Guidelines at myinvois.hasil.gov.my and consult a qualified tax professional for advice specific to your business.
Last updated: 6 November 2026 | Written by Yinn Sheng Ng, Head of Marketing
References
- Ministry of Finance Malaysia, Budget 2027 Tax Measures (tabled 9 October 2026), Appendices 1, 2 and 11: https://belanjawan.mof.gov.my/pdf/belanjawan2027/ucapan/tax-measures.pdf
- Ministry of Finance Malaysia, Budget 2027 speech (9 October 2026), paragraphs 29 to 31: https://belanjawan.mof.gov.my/pdf/belanjawan2027/ucapan/bs27.pdf
- Ministry of Finance Malaysia, Fiscal Outlook 2027, Section 2 Federal Government Revenue: https://belanjawan.mof.gov.my/pdf/belanjawan2027/revenue/section2.pdf
- LHDN, Tax Rate (individual, page last updated 26 June 2026): https://www.hasil.gov.my/en/individu/kadar-cukai/
- LHDN, Tax Rate of Company (page last updated 25 June 2026): https://www.hasil.gov.my/en/syarikat/kadar-cukai-syarikat/
- LHDN, Introduction to Individual Income Tax (page last updated 23 October 2026): https://www.hasil.gov.my/en/individu/pengenalan-cukai-pendapatan-individu/
- LHDN, Rebates (page last updated 10 July 2026): https://www.hasil.gov.my/en/individu/rebat/
- LHDN, Tax Treatment Residents and Non-Residents (PDF dated 8 April 2026): https://www.hasil.gov.my/wp-content/uploads/Tax-Treatment-Residents-Non-Residents.pdf
- LHDN, Withholding Tax (page last updated 5 October 2026): https://www.hasil.gov.my/en/perundangan/cukai-pegangan/
- LHDN, Explanatory Notes Form BE Year of Assessment 2025: https://ef.hasil.gov.my/eBE2026/Pdf/Nota_BE_e.pdf
- Income Tax Act 1967 (Act 53), consolidated: https://www.hasil.gov.my/wp-content/uploads/20240521-akta-cukai-pendapatan-1967-akta-53.pdf
Based on: MOF Budget 2027 Tax Measures (9 October 2026); LHDN individual, company, rebate and residence pages as cited above. Budget 2027 figures are proposals until the Finance Bill is passed. Verified 5 November 2026.