Malaysia Income Tax Rates 2026: Personal Tax, Corporate Tax, SST and Capital Gains
Malaysia imposes progressive income tax on resident individuals, generally a flat rate on non-resident individuals, corporate income tax on business profits and separate taxes on specified sales, services and capital disposals. The applicable year of assessment and the taxpayer's circumstances are essential.
Resident individual income tax rates
Under the Income Tax Act 1967, resident individuals are taxed on chargeable income using progressive marginal bands. Chargeable income is income after allowable deductions and reliefs, not gross salary. The Inland Revenue Board of Malaysia (LHDN/HASiL) publishes the following schedule for YA 2025:
| Annual chargeable income | Marginal tax rate |
|---|---|
| RM 0 - 5,000 | 0% |
| RM 5,001 - 20,000 | 1% |
| RM 20,001 - 35,000 | 3% |
| RM 35,001 - 50,000 | 6% |
| RM 50,001 - 70,000 | 11% |
| RM 70,001 - 100,000 | 19% |
| RM 100,001 - 400,000 | 25% |
| RM 400,001 - 600,000 | 26% |
| RM 600,001 - 2,000,000 | 28% |
| RM Above 2,000,000 | 30% |
Only income within each band is taxed at that band's rate. The schedule does not imply that all income is taxed at the highest applicable marginal rate. See the official individual income tax rate tables and LHDN's 2026 e-filing guide for YA 2025.
Deductions, reliefs and tax rebates
Qualifying residents may claim personal reliefs for themselves and eligible family members, certain medical and education costs, retirement and insurance contributions, approved donations and other expenses, subject to the applicable year's statutory conditions and ceilings. An employment expense is not automatically deductible merely because it was incurred while working; it must satisfy the applicable deduction rules.
Tax rebates and reliefs are distinct: a relief reduces chargeable income, whereas a rebate generally reduces tax payable. Consult LHDN's tax relief information and current return instructions.
Tax residence and non-resident income tax
Residence status is determined under section 7 of the Income Tax Act 1967, generally by days physically present in Malaysia and statutory linking rules. Presence for 182 days or more in a calendar year commonly establishes residence, but shorter periods may also qualify under specific tests. Citizenship alone does not determine tax residence.
Under Part I of Schedule 1, a non-resident individual's taxable Malaysian income is generally charged at 30% without the personal reliefs available to residents. Special treatment, exemptions or treaty relief may apply to particular income and circumstances. See Public Ruling No. 2/2026 on foreign nationals working in Malaysia.
Corporate income tax in Malaysia
Malaysia's standard corporate income tax rate is generally 24%. Eligible resident micro, small and medium companies and limited liability partnerships can qualify for preferential rates, subject to capital, gross business income, ownership and other conditions.
| Eligible company's chargeable income | Rate |
|---|---|
| First RM150,000 | 15% |
| RM150,001 to RM600,000 | 17% |
| Above RM600,000 | 24% |
| Other companies (general rate) | 24% |
The reduced-rate criteria are not satisfied by the income band alone. Consult LHDN corporate tax rate guidance and Public Ruling No. 8/2025 on MSMEs.
Sales and Service Tax (SST): GST replaced
Malaysia's former 6% Goods and Services Tax (GST) is historical; GST was replaced by Sales and Service Tax (SST) from 1 September 2018. It would be incorrect to describe the old GST as the current nationwide tax.
Sales tax is generally charged on taxable goods manufactured in or imported into Malaysia, with exemptions and different applicable rates. The Sales Tax (Rate of Sales Tax) Order 2025, effective 1 July 2025, sets a general 10% rate subject to its exclusions and other applicable orders.
Service tax is generally 8% for taxable services, while specified categories such as food and beverage, logistics, telecommunications and parking are generally 6%. The scope expanded from July 2025, with category-specific implementation dates, exemptions and revisions; for example rental and leasing services have a 6% rate effective January 2026 under Customs guidance. Credit and charge cards have a specific charge rather than the ordinary percentage rate.
Authoritative resources: Royal Malaysian Customs SST overview, service tax FAQ and Sales Tax (Rate of Sales Tax) Order 2025.
Real property gains tax and capital gains tax
Real Property Gains Tax (RPGT) under the Real Property Gains Tax Act 1976 applies to chargeable gains on disposals of Malaysian real property. The rate depends on the disposal date, holding period and category of disposer. For Part I Schedule 5 disposers, including Malaysian citizens and permanent residents in the relevant category, rates for disposals from 2022 are generally 30% within the first three years, 20% in the fourth year, 15% in the fifth year and 0% from the sixth year. Other disposer categories may continue to face tax after five years.
Separately, Malaysia introduced capital gains tax on specified unlisted shares for relevant entities from 1 January 2024 under the Income Tax Act 1967. Rules differ for assets acquired before or after that date, and exemptions or elections may apply. This is not a general tax on every personal share sale.
Read official RPGT rate tables, RPGT guidance and LHDN's 2025 capital gains tax guidelines for unlisted shares.
Withholding tax on payments
Under provisions including sections 107A, 109, 109B and 109F of the Income Tax Act 1967, withholding may apply to specified payments to non-residents, including royalties, interest, contract payments and certain services. Common domestic rates include 15% for certain interest and 10% for royalties, but the payment classification, exemptions and applicable double taxation agreement must be checked. Ordinary single-tier dividends are generally not subject to dividend withholding tax, although separate dividend taxation rules may affect recipients.
See LHDN's official portal for current withholding guidance and treaty information.
Excise duties
Excise duty may apply to specified goods including tobacco products, alcoholic beverages, motor vehicles and other prescribed items under Malaysia's Excise Act 1976 and relevant subsidiary orders. Rates are product-specific rather than a uniform percentage. Consult Royal Malaysian Customs for current schedules.
Historical reference: Malaysia tax in 2017-2018
For historical comparison, resident individual rates in the 2017-2018 period were progressive up to 28%, the ordinary corporate rate was 24%, and eligible smaller companies were generally taxed at 18% on the first RM500,000 for YA 2017-2018 with 24% above that threshold. Malaysia then operated GST at 6%, which is no longer the applicable consumption tax. Historical property gains tax rules also differ from current RPGT rules. Use the assessment-year-specific official tables when preparing amended or historical returns.
This is general information, not a substitute for the legislation, current official guidance or professional advice. Rates, reliefs, exemptions and filing requirements can differ by year of assessment and taxpayer status.