The government is raising individual income tax relief for the first time since 2010, while expanding deductions to cover more everyday expenses. The measures include tax relief for AI subscriptions, pet vaccinations and pet adoption, alongside lower tax rates for selected income brackets.
Individual income tax relief will be increased from RM9,000 to RM12,000 under Budget 2027. Prime Minister Datuk Seri Anwar Ibrahim announced the changes while tabling the national budget in the Dewan Rakyat today, saying they are intended to ease the cost-of-living burden on middle-income earners.
Lower Tax Rates For Selected Income Brackets
Under the revised tax structure, individuals with taxable income between RM70,000 and RM100,000 will see their income tax rate reduced to 18%. Those in the RM100,000 to RM150,000 bracket will also benefit from a lower rate of 24%.
The government will take a progressive approach to taxation by setting the income tax rate at 30% for individuals earning more than RM1 million. Anwar said the government recognised the financial pressures faced by the M40 group, which continues to be squeezed by the rising cost of living.
Expanded Tax Reliefs
Budget 2027 will expand individual tax reliefs to cover a wider range of expenses, including subscriptions to artificial intelligence (AI) services, pet vaccinations and the adoption of pets from registered centres. The specific relief limit for these newly covered expenses has yet to be announced.
The inclusion of AI subscriptions could encourage more Malaysians to adopt AI tools, supporting the country’s ambition to become a regional AI hub. This follows the government’s broader AI ambitions outlined during last year’s Budget 2026 presentation, although AI tool usage in Malaysia reportedly remains low compared with several other countries in the region.
Other changes include extending medical tax relief to cover postnatal care services and broadening relief for the care of parents and grandparents to include all care-related expenses, rather than only healthcare costs. Sports equipment relief will also cover sports shoes, while education and skills training relief will be expanded to include all fields of study and children’s tuition fees.
(Source: Parliament of Malaysia [Youtube])
