Introduction
Malaysia practices a progressive rate income tax. This means that your income is not taxed as a whole, but rather different amounts are taxed at different rates. This ranges from 0% to 30% at the highest income band. What this means is that every tax payer in Malaysia is categorised according to their chargeable incomes. Based on this, you are put into a tax income band to pay a certain tax rate.
The Inland Revenue Board (LHDN) revised the income bands above RM100,000 per year starting from the Year of Assessment 2023 in accordance with new tax rates.
This was to reduce the income tax on middle income earners, while increasing taxation on the highest earners.
How much income tax you pay depends on your tax rate
Based on your chargeable income for 2023, we can calculate how much tax you will be paying for last year’s assessment.
Here are the progressive income tax rates for the Year of Assessment 2023 [for tax filing in 2024]:
| Chargeable Income | Calculations (RM) | Rate % | Tax(RM) |
|---|---|---|---|
| 0 - 5,000 | On the First 2,500 | 0 | 0 |
| 5,001 - 20,000 | On the First 5,000 | 1 | 0 |
| Next 15,000 | 150 | ||
| 20,001 - 35,000 | On the First 20,000 | 3 | 150 |
| Next 15,000 | 450 | ||
| 35,001 - 50,000 | On the First 35,000 | 6 | 600 |
| Next 15,000 | 900 | ||
| 50,001 - 70,000 | On the First 50,000 | 11 | 1,500 |
| Next 20,000 | 2,200 | ||
| 70,001 - 100,000 | On the First 70,000 | 19 | 3,700 |
| Next 30,000 | 5,700 | ||
| 100,001 - 250,000 | On the First 100,000 | 25 | 9,400 |
| Next 300,000 | 75,000 | ||
| 250,001 - 400,000 | On the First 400,000 | 26 | 84,400 |
| Next 200,000 | 52,000 | ||
| 400,001 - 600,000 | On the First 600,000 | 28 | 136,400 |
| Next 1,400,000 | 392,000 | ||
| Exceeding 2,000,000 | On the First 2,000,000 | 30 | 528,400 |
| Next ringgit | --- |
Source: LHDN
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How do you calculate your income tax rate?
Here’s an example on how to calculate your tax based on the personal income tax rate above:
Chargeable income: RM65,850
You can calculate your taxes based on the formula above, and just make sure your total income in the first column comes up to your total chargeable income.
Too much math for you?
Go on to the Malaysia income tax calculator to calculate how much tax you will have to pay!
