Income tax Malaysia 2017 vs 2018 for individuals: What’s the difference in tax rate and tax reliefs?

Are there any differences between the income tax rate and tax relief for individuals in Malaysia for 2017 and 2018? — Picture courtesy of RinggitPlus
Are there any differences between the income tax rate and tax relief for individuals in Malaysia for 2017 and 2018? — Picture courtesy of RinggitPlus

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KUALA LUMPUR, March 11 — Now that Malaysians can begin filing their taxes, it’s good practice to take a good look at your hard-earned income from the previous year and take advantage of the tax reliefs offered by the Inland Revenue Board (IRB) to get some money back via tax refunds.

It is also good practice to see if there are any changes in different assessment years. These changes may come in the form of different tax rates in different income tiers, or some tweaks to the tax reliefs available. Knowing these changes may be beneficial for you as it can prevent you from overpaying your income tax for the year.

Income tax rate Malaysia 2018 vs 2017

For assessment year 2018, the IRB has made some significant changes in the tax rates for the lower income groups. Not only are the rates 2% lower for those who has a chargeable income between RM20,000 and RM70,000, the maximum tax rate for each income tier is also lower.

Similarly, those with a chargeable income above RM100,000 will also see them paying a lower amount of income tax – even though the tax rates have not changed. What has changed is the maximum tax payable for each income bracket; there is a decrease of RM1,000 in each income bracket.

The comparison table below illustrates the changes clearly:

Chargeable Income

Calculations (RM)

YA 2017 Rate (%)

YA 2018 Rate (%)

YA 2017 Tax (RM)

YA 2018 Tax (RM)

0-5000

On the first 2,500

0

0

0

0

5,001-20,000

On the first 5,000
Next 15,000


1


1


150


150

20,001-35,000

On the first 20,000 
Next 15,000



5



3

150 

750

150 

450

35,001-50,000

On the first 35,000 
Next 15,000



10



8

900 

1,500

600 

1,200

50,001-70,000

On the first 50,000 
Next 20,000



16



14

2,400 

3,200

1,800 

2,800

70,001-100,000

On the first 70,000 
Next 30,000



21



21

5,600 

6,300

4,600 

6,300

100,001-250,000

On the first 100,000 
Next 150,000



24



24

11,900 

36,000

10,900 

36,000

250,001-400,000

On the first 250,000 
Next 150,000



24.5



24.5

47,900 

36,750

46,900 

36,750

400,001-600,000

On the first 400,000 
Next 200,000



25



25

84,650 

50,000

83,650 

50,000

600,001-1,000,000

On the first 600,000 
Next 400,000



26



26

134,650 

104,000

133,650 

104,000

Exceeding 1,000,000

On the first 1,000,000 
Next ringgit



28



28

238,650 

..

237,650 

.

Income tax relief Malaysia 2018 vs 2017

Unlike the income tax rates for 2018 and 2017, there is virtually no change in income tax reliefs for the two assessment years. In fact, there is only one minor change, which applies to the medical expenses and examination of the individual, spouse, or child.

What changed is that the RM500 tax relief for complete medical examination for the individual, spouse, or child has been incorporated into the total tax relief for medical expenses for serious diseases for the individual, spouse, or child of RM6,000.

Here’s a table to show the difference:

YA 2018:

Medical expenses for serious diseases for self, spouse, or child

 RM6,000 (Limited)

Complete medical examination for self, spouse, or child – RM500 (Limited)

 

YA 2017:

Medical expenses for serious diseases for self, spouse, or child

RM6,000 (Limited)

Complete medical examination for self, spouse, or child

RM500 (Limited)

Essentially, for YA 2018, the tax relief for medical expenses for serious diseases as well as complete medical examination has been combined — though the maximum relief for the complete medical examination remains at RM500.

Overall, the changes in income tax rate and relief for YA 2017 and 2018 aren’t too drastically different. The lower- and middle-income groups save a little more, while the high earners pay a little extra, as the government aims to even the scales and be fair to the rakyat from all income groups.

*This article was brought to you by RinggitPlus.com.

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