OCTOBER 14 — Each year, Malaysia’s national budget charts the country’s economic direction, balancing fiscal responsibility with the well-being of the rakyat.
Budget 2026, aptly themed “The People’s Budget,” continues this commitment with a focus on inclusivity, sustainability, and shared prosperity.
This year’s budget ensures that economic progress benefits all Malaysians through expanded social support, strategic subsidies, and initiatives that strengthen domestic growth and resilience.
Strengthening Social Support and Reducing Cost of Living
A key highlight of Budget 2026 is the continued support through the Sumbangan Asas Rahmah (SARA) initiative, which provides direct financial assistance to households, senior citizens, and individuals in need.
The total value of SARA for 2026 stands at RM13 billion, combining payments from the final phase of 2025.
The payments up to Phase 3 have been disbursed, worth RM6 billion ringgit.
Before Deepavali 2025, eligible recipients will receive the Phase 4 payment worth RM2 billion ringgit on 18 October 2025, amounting to RM100 for household and senior citizen categories.
In 2026, SARA will increase substantially to RM15 billion, providing RM600 to RM1,200 annually based on income and family size, along with a one-off RM100 payment in mid-February 2026 for Malaysians aged 18 and above in conjunction with Hari Raya and Chinese New Year.
The RM15 billion SARA allocation serves as more than social assistance — it acts as an economic multiplier.
When recipients spend their aid on daily needs such as food, groceries, and services, the money circulates within communities, boosting sales for small traders and local businesses.
This increased activity generates jobs and tax revenue through SST, income tax, and business levies, creating a virtuous economic cycle.
Government support not only eases living costs but also drives domestic consumption, strengthens the national tax base, and transforms public spending into sustainable economic growth — ensuring every ringgit invested in the rakyat benefits the wider economy.
In addition, the BUDI95 programme continues to help reduce the burden of rising fuel costs.
Under this subsidy, eligible individuals can save up to RM183 per month on fuel expenses, as the price of RON95 petrol is reduced to RM1.99 per litre compared to the pre-BUDI95 market price of around RM2.06 per litre, allowing purchases of up to 300 litres per month.
Beyond easing the cost of living, this measure also increases disposable income, encouraging greater domestic spending that supports small businesses and generates tax revenue — a strategic, indirect approach to strengthening Malaysia’s local economy.
Personal Tax Reliefs: Empowering Households and Families
A strong economy is built on stable households.
Budget 2026 enhances personal tax reliefs to ease living costs and promote responsible spending in key areas of health, education, and sustainability.
Key highlights include:
Vaccination expenses – Tax relief for vaccination costs, promoting preventive healthcare.
Childcare and kindergarten fees – Higher deductions to support working parents and early childhood development.
Early intervention and rehabilitation programmes – Relief for programmes supporting children with learning disabilities.
Insurance premiums – Expansion of relief for life insurance.
Environmental sustainability and home safety expenditure – Relief for eco-friendly and safety-related home improvements.
Entrance fees to tourist attractions and cultural programmes – Tax relief to encourage domestic tourism and cultural appreciation.
Corporate Tax Incentives: Driving Innovation and Inclusive Growth
To sustain competitiveness and inclusivity, Budget 2026 introduces a range of corporate tax incentives that encourage innovation, skills development, and equitable employment.
Key incentives include:
AI and digital training – Enhanced deductions for artificial intelligence and digital technology training.
Tour operator incentives – Tax relief for licensed tour operators to promote sustainable tourism.
Scholarship incentives – Deductions for companies providing scholarships in key growth fields.
Training of care workers – Incentives for developing skilled care professionals.
Employment of vulnerable persons – Benefits for hiring persons with disabilities, single parents, and long-term unemployed individuals.
Employment of senior citizens – Tax incentives encouraging the employment of older workers and active ageing.
Stamp Duty and Tax Structure: Supporting Homeownership and Economic Dynamism
Stamp duty exemptions remain for properties valued up to RM500,000, continuing to assist first-time homebuyers and middle-income families.
No major new taxes are introduced, apart from the gradual carbon tax, reflecting Malaysia’s commitment to environmental sustainability.
At the same time, the government remains focused on enhancing the ease of doing business and attracting quality investments to strengthen domestic growth.
Accelerated Capital Allowance: Encouraging Business Expansion
The Accelerated Capital Allowance (ACA) scheme will continue for qualifying capital expenditures, allowing faster depreciation claims and improved cash flow.
This initiative supports investment in technology, automation, and green infrastructure, particularly benefiting SMEs and industries seeking to modernise operations.
Conclusion
Budget 2026 reaffirms Malaysia’s dedication to being inclusive and maintaining sustainable growth.
By combining social support, tax reliefs, and forward-looking incentives, it balances compassion with fiscal prudence.
Through these measures, the government strengthens the nation’s foundations for a resilient, innovative, and people-centred economy.
* Datuk Harjit Singh Sidhu is CEO of HSS Advisory Sdn Bhd.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
