Resident income tax on chargeable income across the YA 2025 bands.
Tax payable
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Gross tax
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Effective rate
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Marginal rate
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Your breakdown
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Item
Amount
Worked example
Take a resident with chargeable income of RM60,000 for YA 2025, assessed separately. The progressive scale taxes each slice at its own rate, not the whole amount at the top rate. The first RM5,000 is free. The slice from RM5,001 to RM20,000 is taxed at 1 percent, which is RM150. The slice from RM20,001 to RM35,000 is taxed at 3 percent, which is RM450. The slice from RM35,001 to RM50,000 is taxed at 6 percent, which is RM900. The final RM10,000 from RM50,001 to RM60,000 sits in the 11 percent band and adds RM1,100. Adding the bands gives RM2,600 of tax. Because chargeable income is above RM35,000, the RM400 rebate does not apply, so the tax payable stays RM2,600. That is an effective rate of about 4.33 percent even though the marginal rate is 11 percent.
Band
Rate
Tax (RM)
First 5,000
0%
0
5,001 to 20,000
1%
150
20,001 to 35,000
3%
450
35,001 to 50,000
6%
900
50,001 to 60,000
11%
1,100
Total tax payable
2,600
How it is calculated
Malaysia taxes resident individuals on a progressive marginal scale for YA 2025, running from 0 percent on the first RM5,000 of chargeable income up to 30 percent on income above RM2,000,000. Chargeable income is your total income after deducting all eligible reliefs, such as the automatic RM9,000 individual relief, EPF and life insurance, and lifestyle claims, so the figure here is already net of those. Each band applies only to the portion of income that falls inside it, which is why the effective rate is well below the marginal rate. A RM400 individual rebate is then subtracted where chargeable income does not exceed RM35,000, and a further RM400 spouse rebate applies on joint assessment within that same ceiling. Zakat and fitrah paid by Muslim taxpayers are rebated in full against the tax otherwise due. The result is the tax payable for the year, which monthly PCB deductions are designed to approximate.
Frequently asked questions
How much income tax do I pay in Malaysia for YA 2025?
Resident individuals are taxed on a progressive scale from 0 percent on the first RM5,000 of chargeable income up to 30 percent on chargeable income above RM2,000,000. A RM400 individual rebate applies where chargeable income does not exceed RM35,000, and a further RM400 spouse rebate is available on joint assessment within that same ceiling.
What is chargeable income and how do I calculate it from my salary?
Chargeable income is your total assessable income minus all eligible tax reliefs. For a salaried employee, you start with gross employment income, deduct the automatic RM9,000 individual relief, then subtract other reliefs you qualify for, such as EPF contributions up to RM4,000, life insurance premiums, medical expenses, and lifestyle claims. The figure left after those deductions is what the progressive tax scale is applied to, so a higher gross salary does not always mean proportionally more tax if you claim substantial reliefs.
Does Malaysia tax foreign-sourced income for residents?
Malaysia generally does not tax foreign-sourced income remitted into the country by resident individuals, making it one of the few countries with a territorial system for personal tax. However, the scope of this exemption has been subject to Budget revisions and targeted rules for certain high earners and companies, so checking the current position with LHDN or a tax adviser before remitting large overseas sums is advisable.
What is the difference between effective tax rate and marginal tax rate?
The marginal tax rate is the rate applied to the last ringgit of your chargeable income, reflecting the band your topmost income falls into. The effective tax rate is your total tax divided by your total chargeable income, and it is always lower than the marginal rate because earlier bands are taxed at lower rates. For example, someone with RM60,000 of chargeable income has an 11 percent marginal rate but an effective rate of about 4.3 percent, because most of the income was taxed at the lower bands below.