The government has raised individual income tax relief from RM9,000 to RM12,000 and reduced personal income tax rates for middle-income earners under Budget 2027, providing up to RM1,600 in additional disposable income to approximately five million taxpayers.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced the RM3,000 increase in individual tax relief, marking the first revision since 2010, alongside a one-percentage-point reduction in selected personal income tax brackets.
Under the revised structure, Anwar said the tax rate for resident individuals with chargeable income between RM70,000 and RM100,000 will be reduced to 18%, while the rate for those earning between RM100,000 and RM150,000 will fall to 24%.
“The measures are aimed at easing cost-of-living pressures on middle-income households, particularly the M40 group,” he said during the tabling of Budget 2027 in the Parliament on Oct 9.
At the same time, he also announced the expansion of individual tax relief across several spending categories.
“Medical relief will now cover postnatal care services, while tax relief for parental and grandparent care will be extended to all caregiving expenses rather than being restricted to healthcare costs.
“Sports-related relief will include the purchase of sports shoes, while education and skills-related relief will be expanded to cover all fields of study and children’s tuition fees,” he said.
Lifestyle tax relief will also be broadened to include artificial intelligence subscriptions, pet vaccinations and adoption costs from registered animal shelters.
Meanwhile, Anwar highlighted that the government will adjust the income tax rate for individuals earning more than RM1 million to 30%.
Anwar said the combination of higher individual tax relief and lower income tax rates would provide up to RM1,600 in additional disposable income for around five million taxpayers.
The changes form part of Budget 2027’s measures to ease household financial pressures while adjusting the personal income tax structure.
