The short answer
Tax is not charged on your gross salary. It is charged on chargeable income — annual employment income less EPF relief (capped at RM4,000), less other claimed reliefs (including TP1 reliefs), less other allowable deductions. Applying the tax rates directly to gross salary overstates your tax. The resident individual schedule for Year of Assessment (YA) 2026 is the schedule behind PCB, and only the slice of income inside each band is taxed at that band’s rate.
The YA2026 tax bands
| Chargeable income (RM) | Rate on this band | Tax on this band (RM) | Cumulative tax at top of band (RM) |
|---|---|---|---|
| First 5,000 | 0% | 0 | 0 |
| 5,001 – 20,000 | 1% | 150 | 150 |
| 20,001 – 35,000 | 3% | 450 | 600 |
| 35,001 – 50,000 | 6% | 900 | 1,500 |
| 50,001 – 70,000 | 11% | 2,200 | 3,700 |
| 70,001 – 100,000 | 19% | 5,700 | 9,400 |
| 100,001 – 400,000 | 25% | 75,000 | 84,400 |
A person with RM47,000 of chargeable income does not pay 6% on all RM47,000. They pay RM0 (first RM5,000) + RM150 (next RM15,000 at 1%) + RM450 (next RM15,000 at 3%) + RM720 (RM12,000 of the 6% band) = RM1,320. Their marginal rate is 6% — the rate on the next ringgit — but their effective rate is 1,320 ÷ 47,000 = 2.81%. Quoting only the marginal rate as “your tax rate” is misleading.
Reliefs that come off first
Three reliefs are automatic — your employer already counts them in your monthly PCB, so do not claim them again on a TP1 form: individual relief of RM9,000 for every resident individual; spouse relief of RM4,000 where your spouse has no income or no separate assessment; and child relief of RM2,000 per qualifying child. EPF relief is capped at RM4,000 a year (voluntary plus mandatory combined), even if your actual EPF is higher. Other reliefs, such as the lifestyle relief of RM2,500, must be declared by you — monthly through Borang TP1 to your employer, or finally on your annual return. A relief reduces your chargeable income, so it saves only your marginal rate times the relief: at a 6% marginal rate, a RM2,500 relief saves RM150 of tax.
The RM400 individual rebate is different. It applies when chargeable income does not exceed RM35,000, and it reduces the tax itself, ringgit for ringgit. It does not reduce chargeable income, and it cannot reduce tax below zero.
Worked example 1 — RM5,000 a month
Assumptions: single resident employee, fixed salary RM5,000 a month, EPF 11% (RM550 a month), no TP1 reliefs, no spouse or child reliefs, no zakat, no bonus. This is a simplified annual illustration — annual gross less reliefs, then the table above, then ÷ 12. It does not reproduce the month-by-month computerised formula.
| Step | Calculation | Amount (RM) |
|---|---|---|
| Annual gross salary | RM5,000 × 12 | 60,000 |
| Less: EPF relief | Capped at 4,000 (actual EPF is RM6,600, but the relief cap applies) | −4,000 |
| Less: Individual relief | Automatic | −9,000 |
| Chargeable income | 47,000 | |
| Tax on RM47,000 (YA2026 schedule) | RM600 (tax up to RM35,000) + 6% × (47,000 − 35,000) = 600 + 720 | 1,320/year |
| Monthly PCB (annualised) | 1,320 ÷ 12 | 110/month |
Worked example 2 — RM3,000 a month
Same assumptions, single resident employee on RM3,000 a month. Annual gross salary is RM36,000. After EPF relief of RM3,960 (RM330.00 a month × 12, under the RM4,000 cap) and individual relief of RM9,000, chargeable income is RM23,040. The computed tax on RM23,040 is RM241.20 — and the RM400 rebate applies because chargeable income does not exceed RM35,000. The rebate exceeds the computed tax, so annual tax is nil (a rebate cannot take tax below zero), and monthly PCB is RM0. The tax-bracket table shows the same RM3,000 example on a simplified RM23,000 basis; the conclusion — no PCB — is the same. That matches the published position that a single employee on RM3,000 a month with usual EPF typically pays no PCB. In the real monthly formula, MTD under RM10 is not deducted in any case.
Why two people on the same salary can pay different tax
Adding a spouse with no income (−RM4,000 relief) or children (−RM2,000 each) lowers chargeable income and can drop a person into a lower band. Adding a TP1 relief does the same. Adding a bonus raises annual income, and its PCB is computed as additional remuneration, not at the monthly rate. Non-residents are different again: a flat 30% with no personal reliefs — do not use the resident table for a non-resident.
FAQ — How Much Salary Is Taxable in Malaysia
Q: Is my whole salary taxed?
A: No. Tax is charged on chargeable income — annual employment income less EPF relief capped at RM4,000, less individual relief of RM9,000 and any other reliefs you claim. Only what is left is taxed, using the YA2026 bands.
Q: How much salary is tax-free?
A: For resident individuals, the first RM5,000 of chargeable income is taxed at 0%. That is chargeable income, not gross salary — reliefs come off first. Non-residents do not get this; they pay a flat 30% with no reliefs.
Q: At what salary do I start paying PCB?
A: There is no single salary figure. It depends on your reliefs, spouse and children, TP1 claims and bonuses. A single employee on RM3,000 a month with usual EPF typically pays no PCB. Check the site’s PCB calculator and your payslip for your own figure.
Q: What is the RM400 rebate?
A: An individual rebate of RM400 applies when chargeable income does not exceed RM35,000. It reduces the tax itself, ringgit for ringgit, and cannot reduce tax below zero. In the RM3,000 example it wipes out the RM241.20 computed tax entirely.
Q: Does EPF relief cover all my EPF?
A: No. The relief is capped at RM4,000 a year (voluntary plus mandatory combined), even though 11% of a RM5,000 salary is RM6,600 a year in actual EPF.
Q: Do I still need to file if no PCB was deducted?
A: Possibly. PCB deducted is not automatically your final tax. If you are required to file, claim the same reliefs on your annual return — any overpaid PCB comes back as a refund.
Sources: LHDN resident individual tax schedule, YA2026 (see the PCB tax bracket table 2026); HASiL TP1 Form (1/2026) and explanatory notes. This guide is an independent estimate aid, not an official LHDN publication and not tax advice. Figures are estimates for standard cases; bonuses, commissions, benefits in kind, and non-standard relief combinations can change the result. Check your figure with LHDN’s official calculator (calcpcbplus.hasil.gov.my) and your payslip.
Primary official source / Sumber rasmi / 官方来源
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