KUALA LUMPUR, Oct 19 — Before you file your next income tax return, remember to lookout for existing and new tax reliefs.
Under the recently announced Budget 2027, the list of tax reliefs has been expanded for taxpayers.
If you do not already know, taxpayers can even make claims for artificial intelligence (AI) subscriptions — a first for Malaysia’s individual tax reliefs — alongside existing reliefs for education, healthcare and social security contributions.
The list is quite extensive, so here is what you could claim, what is changing and the limits to keep in mind when filing your taxes.
Existing tax reliefs and what will change
Education and skills training
The existing education fee relief of up to RM7,000 will be expanded to cover qualifying formal education in any field.
Taxpayers can claim fees for their own certificate, diploma, bachelor’s degree, master’s degree or Doctor of Philosophy (PhD) studies at recognised local institutions or professional bodies, subject to the prescribed conditions.
This could cover recognised fields such as business, law, accounting, engineering, information technology, healthcare and the arts.
The proposed changes also cover:
- Technical and vocational education and training (TVET) — Up to RM3,000 for qualifying courses undertaken by the taxpayer or spouse.
- Other courses and classes — Up to RM2,000 for qualifying courses, training and self-enhancement classes unrelated to employment for the taxpayer or spouse.
- Children’s tuition — Up to RM2,000 for qualifying courses, classes or tuition in science, technology, engineering and mathematics (STEM), arts, languages and religion.
The RM2,000 limit is shared between the latter two categories, not a separate allowance for each. Both sub-limits fall within the overall RM7,000 relief.
Previously, the RM7,000 education relief was restricted to specified fields, while qualifying up-skilling and self-enhancement courses were covered under separate provisions.
Budget 2027 will look at consolidating these into a broader education and skills training relief.
Lifestyle expenses
The existing lifestyle relief of up to RM2,500 covers reading materials, personal computers, smartphones, tablets and internet subscriptions.
Budget 2027 added:
- AI subscriptions — AI software and app subscriptions for personal use by the taxpayer, spouse or child.
- Pet adoption — Adoption costs for pets from registered animal shelters.
- Veterinary services — Qualifying services for pet vaccinations, spaying and neutering.
All these expenses would fall within the existing RM2,500 limit, rather than qualify for separate allowances.
Medical and health expenses
The existing medical treatment relief will be reclassified as health and well-being relief, with the overall limit remaining at RM10,000.
Existing qualifying expenses include treatment for serious illnesses, fertility treatment, vaccinations, dental care, medical examinations and certain diagnostic tests.
The relief also covers assessment, early intervention and rehabilitation for children aged 18 and below with learning disabilities.
Budget 2027 added:
- Postnatal care — Up to RM3,000 for qualifying services provided by a confinement centre or qualified individual.
- Breastfeeding equipment — Up to RM1,000 for qualifying purchases for children aged two and below, paid for by the taxpayer or spouse.
Expenses are claimable within the overall RM10,000 limit.
Parents’ and grandparents’ care
Taxpayers can currently claim up to RM8,000 for expenses relating to their parents and grandparents, including specified medical treatment, dental care, full medical examinations, vaccinations and care services.
Budget 2027 will be extending the relief to all types of care at home, day-care centres and residential care facilities, rather than limiting it to specified medical-related expenses.
Under the proposal, taxpayers would need a written declaration from the carer, excluding the taxpayer, spouse or children, or a copy of the carer’s work permit.
The proposal also removes the requirement for a registered medical practitioner to verify the parents’ or grandparents’ medical condition.
Sports-related expenses
The existing sports relief of up to RM1,000 covers sports equipment, facility rental or entrance fees, registration fees for eligible competitions, gym memberships and sports training fees.
Budget 2027 has included sports shoes — capped at RM300 — within the overall RM1,000 limit.
The relief covers expenses for the taxpayer, spouse, child or parents, subject to the prescribed conditions.
Domestic tourism
The existing relief of up to RM1,000 for domestic tourism expenses applies to the 2026 year of assessment (YA2026) covers entrance fees to attractions such as museums, zoos, theme parks, national parks, marine parks and geoparks, as well as qualifying cultural and arts programmes.
Budget 2027 proposed extending the relief to YA2027.
Social security contributions
The existing RM350 relief covers qualifying Social Security Organisation (Socso) contributions.
Budget 2027 proposed including mandatory contributions under the Self-Employment Social Security Scheme, or Lindung Kendiri for three sectors which are passenger transport, goods and food transport and hawkers.
The existing relief limit remains at RM350, while a separate additional relief of up to RM150 is proposed for qualifying voluntary contributions to Lindung 24 and Lindung Kendiri across 17 non-mandatory sectors.
The changes are intended to encourage social security coverage among self-employed workers, including gig workers and hawkers.
Other existing tax reliefs taxpayers should know about
Budget 2027 does not replace the full range of existing personal tax reliefs.
Taxpayers may continue claiming other qualifying expenses, subject to the applicable limits and conditions.
These include:
- Spouse relief — Up to RM4,000 for a qualifying spouse.
- Disabled individual relief — Up to RM7,000 for an eligible disabled taxpayer.
- Disabled spouse relief — An additional RM6,000 for a qualifying disabled spouse.
- Child relief — Generally RM2,000 for each qualifying child below 18, with different limits for older children in qualifying full-time education and children with disabilities.
- EPF and life insurance — Relief for qualifying contributions and premiums, subject to the applicable limits.
- Private Retirement Scheme (PRS) and deferred annuities — Up to RM3,000 for qualifying contributions and premiums.
- Education savings — Up to RM8,000 for qualifying net annual savings in the National Education Savings Scheme (SSPN).
For the SSPN, the RM8,000 relief was extended under Budget 2025 for YA2025 to YA2027.
Budget 2027 does not propose another extension.
Other tax measures affecting individuals
Contributions to school public contribution funds
Budget 2027 proposed expanding the tax treatment of contributions to approved School Public Contribution Funds, known as Tabung Sumbangan Wang Awam Sekolah (TSUWAS).
Under the existing provisions, individuals and companies can claim a deduction for qualifying cash contributions, capped at 10 per cent of aggregate income.
Contributions in kind do not qualify.
The proposal would allow approved funds to use contributions for a wider range of purposes, including administrative and operating expenses, repairs and maintenance, equipment purchases and school programmes.
Contributions must meet the applicable approval and administration requirements.
The proposal is scheduled to take effect from YA2027.
First-home stamp duty exemption
Separately from income tax relief, Budget 2027 proposed expanding the stamp duty exemption for Malaysian citizens buying their first residential property.
The existing full exemption for qualifying first homes priced up to RM500,000 applies to sale and purchase agreements executed from January 1, 2021 to December 31, 2027, subject to the applicable conditions.
Under the Budget 2027, the exemption would cover qualifying sale and purchase agreements executed from January 1, 2027 to December 31, 2030.
The proposed treatment is:
- Homes priced up to RM500,000 — Full stamp duty exemption on the instrument of transfer and loan agreement.
- Homes priced above RM500,000 and up to RM750,000 — Full exemption on the first RM500,000 and a 50 per cent exemption on the remaining portion, subject to the applicable stamp duty calculation.
For a qualifying first home priced at RM700,000, the first RM500,000 would be fully exempt, while the remaining RM200,000 would receive a 50 per cent exemption.
The exemption is subject to eligibility requirements, including Malaysian citizenship and first-home ownership conditions.
This is a stamp duty exemption, not an income tax relief claimed through an annual tax return.