Anwar Raises Tax Relief, Cuts Rates in Budget 2027

KUALA LUMPUR, Oct 9 — Prime Minister Datuk Seri Anwar Ibrahim announced significant changes to Malaysia’s individual income tax framework in Budget 2027, aimed at easing cost‑of‑living pressures for the middle‑income group.

The individual income tax relief limit has been raised to RM12,000 from RM9,000, the first revision since 2010. Anwar, who is also Finance Minister, said the relief expansion now covers medical treatment including postnatal care, parental and grandparental care beyond medical expenses, sports shoes, children’s tuition fees, and course training across all fields. Lifestyle relief has also been broadened to include artificial intelligence (AI) subscriptions, vaccination costs, and pet adoptions from registered centres.

Tax Relief

At the same time, resident taxpayers in the RM70,000–RM150,000 chargeable income range will benefit from a one‑percentage‑point reduction. Those earning RM70,001–RM100,000 will now be taxed at 18%, while those in the RM100,001–RM150,000 band will pay 24%. For high‑income earners, taxable income exceeding RM1 million will be adjusted to 30%.

Anwar said these measures reflect the government’s commitment to listening to the concerns of the M40 group, who have remained resilient despite inflationary pressures. “Care for parents and grandparents has been expanded to cover all care expenses and is no longer restricted to medical health,” he told Parliament.

According to the Prime Minister, the combined effect of higher reliefs and lower tax rates will yield up to RM1,600 in additional disposable income for about five million taxpayers. The budget, themed Malaysia Madani: Reaching for the Sky, Rooted in the Ground, underscores a progressive approach to fiscal policy.

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