2027 Budget: Income tax rates cut, tax relief expanded

KUALA LUMPUR: In the 2027 Budget, Prime Minister Datuk Seri Anwar Ibrahim announced reduced tax rates for high-earners and expanded tax relief measures. High-income earners earning over RM1 million annually will face a 30% tax rate. Individual income tax relief limits have been increased from RM9,000 to RM12,000, up from the last review in 2010.

Resident taxpayers will see a one percentage point reduction in their individual income tax rates. The tax rate for taxable income between RM70,000 and RM100,000 will drop to 18%, while the rate for income between RM100,000 and RM150,000 will decrease to 24%.

Anwar also expanded individual tax reliefs to cover a broader range of expenses. Medical tax relief will now include postnatal care services, and care of parents and grandparents will cover all caregiving expenses. Tax relief for sports equipment will now include sports shoes. Education and skills training tax relief will now cover all fields of study and tuition fees for children. Lifestyle tax relief will also be expanded to include AI subscriptions, vaccination costs, and adoption of pets from registered centers.

These measures will provide additional disposable income of up to RM1,600 to about five million taxpayers, according to Anwar.