The 2 percent tax on dividend income above RM100,000.
Dividend tax due
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Taxable excess
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Net dividend
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What changed for Malaysian shareholders in 2025
For years, the headline for Malaysian equity investors was simple: dividends came to you under a single-tier system with no further personal tax, and there was no general capital gains tax on shares for individuals. Budget 2025 kept most of that intact but added one targeted charge. From the year of assessment 2025, a resident individual whose chargeable dividend income passes RM100,000 in a year pays tax on the part above that line. This calculator isolates that single number. You enter your annual chargeable dividend income, and it returns the tax due, the slice of income that is actually taxable, and what you keep after the charge. It is deliberately narrow, because the rule itself is narrow.
Why only the slice above RM100,000 is taxed
The structure here is an excess-only charge, not a cliff. Crossing RM100,000 does not suddenly tax your whole dividend income; it taxes only the amount over the threshold. That design matters because it means there is no penalty for earning exactly one ringgit more than RM100,000. The rate this calculator applies is 2 percent on the excess. So RM100,000 of dividends attracts nothing, RM150,000 attracts tax on RM50,000, and RM500,000 attracts tax on RM400,000. The base that counts is chargeable dividend income, which deliberately leaves out dividends from EPF (KWSP), Amanah Saham Bumiputera, and approved unit trusts. Because the 2 percent rate, the RM100,000 threshold, and the list of exclusions all come from Budget 2025 and are administered by LHDN (the Inland Revenue Board of Malaysia), this tool models them as published; verify the current figure and the exempt categories with LHDN before filing.
RM150,000 of dividends, step by step
Take an investor with RM150,000 of chargeable dividend income for the year. Subtract the RM100,000 threshold and RM50,000 is taxable. Apply 2 percent and the tax is RM1,000. The investor keeps RM149,000. Note how gentle the effective burden is: RM1,000 on RM150,000 is two-thirds of one percent of the whole, because the threshold shelters the first RM100,000 entirely.
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The chart in the results panel above shows the full dividend income split into the sheltered portion (up to the threshold), the taxable excess, and the tax itself, updating live as you change the input.
Who this reaches, and the planning move it invites
In practice, this tax touches a small group: investors with large directly held share portfolios, business owners drawing substantial dividends from their own companies, and high earners with concentrated equity income. If your dividends run in the tens of thousands rather than past RM100,000, the charge is zero. The planning move it quietly invites is spreading dividend income, for example across family members who each have their own threshold, or shifting some allocation toward the exempt vehicles. None of that should be done purely to dodge a 2 percent charge, but it is worth knowing the threshold is per individual. A common error is assuming this is a withholding tax deducted at source like in some countries; it is assessed on your own return, so you need to track your dividend total yourself across all your holdings.
Keep two things separate in your head. This dividend tax is distinct from your ordinary income tax, which runs on Malaysia's progressive resident scale from 0 up to 30 percent with its own reliefs and rebates. And it is distinct from RPGT, which taxes gains on real property, not shares. Selling shares at a profit still attracts no general capital gains tax for individuals; only the dividend stream above the threshold is caught here.
Do I pay this tax if my total dividends are RM90,000?
No. The charge applies only to chargeable dividend income above RM100,000, so RM90,000 produces zero tax. You would only start paying on the amount by which your annual dividends exceed RM100,000, and even then only at 2 percent on that excess.
Are foreign dividends counted toward the RM100,000?
The treatment of foreign-sourced dividends has its own rules and exemptions in Malaysia, and they have shifted in recent budgets. Do not assume overseas dividends are automatically inside or outside the chargeable figure. Check the current position with LHDN, because the answer affects whether you breach the threshold.