Tax relief 2027, the RM12,000 limit and the list of new claims

For the first time since 2010, the individual tax relief limit has been raised, from RM9,000 to RM12,000. Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced it when he tabled Budget 2027 on 9 October, with the aim of easing the burden on middle-income earners (M40).

The government estimates that the higher relief and lower tax rates will give about five million taxpayers up to RM1,600 more in disposable income.

Income tax rates that change in 2027

Income tax rates for resident individuals are cut by one percentage point for two brackets, and raised for the highest earners:

New and expanded tax reliefs for 2027

Reports on the budget tabling did not give the claim limit for each category.

Example: how much you could save

Say your chargeable income is RM90,000 under the old rules. With the individual relief up by RM3,000, your chargeable income falls to RM87,000. Both figures sit in the RM70,000 to RM100,000 bracket, where the rate falls from 19% to 18%:

• RM3,000 no longer taxed at 19%: you save RM570
• RM17,000 (RM70,000 to RM87,000) taxed 1% lower: you save RM170

Estimated saving: about RM740 a year, before counting any other new reliefs you are eligible to claim.

When the new tax reliefs take effect

Tax measures in the Budget have to be passed through the Finance Bill before they take effect. For each category's limit and the year of assessment it covers, check the guidelines from LHDN (the Inland Revenue Board) when they are released. Start keeping receipts now for spending in the new categories above.

Frequently asked questions

What is the individual tax relief limit for 2027?

RM12,000, up from RM9,000. It is the first increase since 2010.

What new tax reliefs can I claim?

Postnatal care, care for parents and grandparents, all fields of study including children's tuition fees, AI service subscriptions, sports shoes, and vaccination and adoption costs for pets from registered centres. The limit for each category has not been detailed.

Which income tax rates are going down?

The RM70,000 to RM100,000 bracket falls to 18%, and the RM100,000 to RM150,000 bracket falls to 24%. The rate for income above RM1 million goes up to 30%.

How much can I save?

The government estimates up to RM1,600 more in disposable income for about five million taxpayers. In the example above, a chargeable income of RM90,000 saves about RM740 a year.

When can I start claiming?

After the Finance Bill is passed. Check LHDN's guidelines for each category's limit and the year of assessment, and keep your receipts from now on.

Read also

• Budget 2027, what changes for your wallet
• When BKK 2027 is paid, RM1,500 for civil servants and RM750 for pensioners
• EPF automatic registration at 18, what changes
• BAP 2027 rises to RM200, Form Six allowance set at RM2,500

Sources

• Sinar Daily, First tax relief rise since 2010: What you can claim
• Malay Mail, Budget 2027: More disposable income for Malaysians, up to RM1,600 thanks to tax reliefs, reductions