KUALA LUMPUR, June 6 — In Malaysia, households are categorised as earning a low, medium or high-income based on which percentile they belong to compared to the population.

This is where a household is categorised into either the bottom 40 per cent (B40) or low-income household, the middle 40 per cent (M40) which is also known as the “middle class”, or the top 20 per cent (T20).

For example, a household is considered as T20 in Malaysia if they are among the top 20 per cent earners in the country.

This categorisation applies to households, rather than individuals. So what is considered a “household”?


According to the Department of Statistics Malaysia (DOSM), a “household” is “a group of related or unrelated individuals who live together and share expenses for food, shelter, and other living necessities”. Meanwhile, “household income” is the total accumulated income received by members of a household.

In short, for example in Kuala Lumpur where a household is considered T20 if they earn more than RM16,640: a husband earning RM7,000 per month with the wife earning RM8,000 per month and a daughter earning RM2,000 living together would be categorised as a T20 household since they earn RM17,000 in total.

Most recently, the T20 came under the media spotlight after Finance Minister Datuk Seri Anwar Ibrahim and his deputy Datuk Seri Ahmad Maslan announced that by next year the group will no longer receive subsidies in certain matters, such as for RON95 fuel.


So do you count as T20 where you live? Take our quiz below to find out, and read more below as we dive deeper into the categories:

How are the B40, M40 and T20 categories determined?

According to DOSM, the B40, M40 and T20 categories are further split into sub-categories.

The B40 is split into four (B1 the lowest earning, to B4), similarly with the M40 (M1 to M4), and two sub-categories for T20 (T1 and T2, the highest earning).

DOSM's most recent Household Income and Basic Amenities Survey Report in 2019, states that every household nationwide earning less than RM2,500 per month is placed in B1, which is the lowest-earning subcategory.

On average, those in B1 earn a meagre RM1,849 (mean) or RM1,929 (median). Read more on the difference between mean and median here.

To be placed in T2 nationwide, a household needs to earn at least RM15,040 per month.

On average, those in T2 earn RM24,293 (mean) or just RM19,781 (median).

What is considered M40 or T20 in each state

As you may have noticed in our quiz, which group you belong to may depend on whether you compare it to the whole country or to the state you live in.

With the average earnings of each household differing between states, with your wage, you may belong in the top 20th percentile in one state but actually be considered as just the middle 40th percentile in others.

For example, Kuala Lumpur households — as expected — have the highest average earnings in the country at RM10,549 (median) or RM13,257 (mean), with 484,300 households here.

This was followed by another Federal Territory, the administrative capital of Putrajaya with an average income of RM9,983 (median) and RM12,840 (mean). In Selangor — considered the country’s richest state — the average income was RM8,210 (median) or RM10,827 (mean).

The five lowest-earning states were Pahang, Kedah, Perak, Sabah and Kelantan.

In Kelantan, households earn on average just RM3,563 (median) or RM4,874 (mean).

Similarly, the threshold to count as M40 or T20 was higher in Kuala Lumpur than anywhere else in the country.

In Kuala Lumpur, to be considered M40 in this Federal Territory, a household needs to earn at least RM9,150. To qualify as T20 here, a household needs to earn RM16,640.

As predicted, the next highest threshold to be considered M40 and T20 in each state are in Putrajaya, followed by Selangor.

The lowest thresholds are in Perak, Sabah and Kelantan — mirroring their status as the lowest-earning states.

In Kelantan, a household just needs to earn RM3,030 to be considered M40 in there, and RM6,620 to be called T20.

To put this into context, if a household is earning, for example, RM8,000 in total, it would be considered T20 in Kelantan — but in Kuala Lumpur, it would not even be considered M40. Instead, it would be considered B40 in Kuala Lumpur.

But nationwide, it would be considered M40 — more accurately in the M3 sub-category.

This huge disparity in who counts as T20 across the country has since fuelled debate on how Putrajaya will classify who belongs in the T20 group that would no longer receive subsidies next year.

This comes as property consultant Knight Frank announced in its recent report that last year Malaysia is among the top 10 countries with the fastest-growing population of ultra-rich individuals — which is defined as having a minimum of US$30 million or RM139 million in net wealth.

In 2017, there were already 491 ultra-high-worth individuals (UNHWI) in the country. By 2021, this number grew to 659 and then 721 people in 2022.

Last month, Economy Minister Rafizi Ramli announced that the government is planning to move away from using the B40, M40 and T20 income classifications to make decisions on matters such as subsidies — but will instead be implementing a metric using “household net disposable income”.

There is no timeframe yet as to when this will be announced.

Deputy Finance Minister Ahmad also explained that the government’s move to stop several subsidies for the top earners in Malaysia was an attempt to rectify its past policy mistakes, and the current administration is not aiming to be populist.

Prime Minister and Finance Minister Anwar also said that his administration will continue to look for methods to ensure subsidies are provided fairly to targeted groups, and that the B40 group will continue to be given attention in the provision of subsidies.

His administration has so far been reluctant to implement blanket capital gains tax and inheritance tax amid growing anger about wealth inequality, but had in Budget 2023 announced a tax on unlisted shares and luxury goods.