Budget 2027: 'Sandwich generation' appreciates tax breaks, but is it enough?

Budget 2027 proposes increasing individual income tax relief from RM9,000 to RM12,000 and widening tax relief to cover expenses such as children's tuition fees and the care of elderly parents and grandparents.

The measures are aimed at easing the financial burden on taxpayers, particularly those juggling the costs of raising children while supporting ageing parents.

However, will the expanded tax breaks offer meaningful relief to the so-called “sandwich generation”, whose household budgets are stretched by rising living costs and the growing expense of caring for both young and old dependents?

For some, the proposals offer welcome breathing room. Others, however, say the actual tax savings may fall far short of their caregiving expenses and that more direct assistance is needed.

‘A few hundred ringgit doesn't change anything’

For private-sector manager Jasbir Bhar, 52, the proposed measures are...

Budget 2027 proposes increasing individual income tax relief from RM9,000 to RM12,000 and widening tax relief to cover expenses such as children's tuition fees and the care of elderly parents and grandparents.

The measures are aimed at easing the financial burden on taxpayers, particularly those juggling the costs of raising children while supporting ageing parents.

However, will the expanded tax breaks offer meaningful relief to the so-called “sandwich generation”, whose household budgets are stretched by rising living costs and the growing expense of caring for both young and old dependents?

For some, the proposals offer welcome breathing room. Others, however, say the actual tax savings may fall far short of their caregiving expenses and that more direct assistance is needed.

‘A few hundred ringgit doesn't change anything’

For private-sector manager Jasbir Bhar, 52, the proposed measures are welcome, but she believes the actual savings may be insufficient to ease the financial burden on families caring for elderly parents.

Jasbir said her family spends RM22,320 a year on a full-time domestic helper to care for her 88-year-old father, excluding recruitment agency fees of RM15,000 every two years, or an average of RM7,500 annually.

These expenses alone amount to nearly RM30,000 a year, before factoring in medication, medical appointments, food, utilities and other personal needs.

READ MORE: Tax breaks for M40, higher levy for millionaires

"The expansion to include non-medical caregiving expenses is honestly - long, long overdue. Our helper's salary and agency fees alone are almost four times the proposed relief limit, so I genuinely feel the government is still very disconnected from the financial realities faced by families who are caring for elderly parents," she told Malaysiakini.

Jasbir also urged Putrajaya to clarify whether domestic helpers' salaries and the associated agency fees would qualify under the expanded relief.

Currently, tax relief of up to RM8,000 is available for specified expenses related to parents' and grandparents' medical treatment and care - including treatment at clinics and hospitals, care at home, day-care and residential care centres, as well as non-cosmetic dental treatment.

Under Budget 2027, the government proposes expanding the relief to cover all expenses related to the care of parents and grandparents.

The education tax relief would also be broadened to allow claims of up to RM2,000 for expenses including children's tuition fees in science, technology, engineering and mathematics (Stem), arts, languages and religious studies.

READ MORE: Eight takeaways from Budget 2027

Jasbir, who lives in Malacca, said the increase in individual income tax relief from RM9,000 to RM12,000 should also be viewed in perspective, as an additional RM3,000 in deductible income does not translate into RM3,000 in actual savings.

The amount saved depends on an individual's taxable income and applicable tax rate, she noted.

She called for higher caregiving relief, means-tested grants and more affordable public care services for the elderly.

"I'm not saying we shouldn't appreciate it, but when you're supporting an elderly parent, managing household expenses and trying to put something aside for your own retirement, a few hundred ringgit a year doesn't change anything.

"I would rather see the government introduce measures that genuinely reduce household expenditure instead of announcing increases in tax relief that sound much more generous than their actual monetary value," Jasbir said.

Every bit helps, but more is needed

Jasbir's concerns are echoed by writer, who wishes to be known only as Salma, 36, who said the wider tax relief would help ease her financial pressures, although she did not expect the savings to be substantial.

With a monthly household income of between RM7,000 and RM10,000, Salma said she had to manage the expenses of raising two children while also supporting her 68-year-old mother.

As a single mother living in the Klang Valley, she said the additional relief would provide some breathing space amid rising living costs.

"The increased tax relief would give some room for us to manage our finances better. Perhaps the savings would not be too great, but for me, every little bit helps, especially with the rising cost of living," she said.

Salma added that caring for an ageing parent involved more than medical bills and medication, with other seemingly minor expenses also adding up.

She estimated that her family spent between RM2,000 and RM3,000 a month on her mother's needs.

While her ex-husband pays for their children's Quran classes, Salma welcomed the proposed tuition-fee relief, saying education costs could be a significant expense for parents.

She also urged the government to pay greater attention to middle-income households, which she said were often overlooked in discussions about financial assistance.

"I hope that it gets better year by year and the exemptions would increase, especially for people in the M40 range. People tend to only look at B40 but also forget that M40s are suffering," she said.

Tax savings vary between households

For some taxpayers, the proposed changes offer a more tangible benefit, although they remain mindful of the limits of tax relief.

Carol Tee (not her real name), a 54-year-old private-sector executive in Kuala Lumpur, estimated that she could save about RM1,100 under the proposed income tax changes, assuming other factors remained constant.

Despite earning a five-figure take-home salary, Tee said she was the sole caregiver for her elderly parents, both of whom are in their 80s.

"As for the income tax brackets, if all things are equal, there would be some savings, perhaps around RM1,100. Better than zero savings," she said.

Tee also welcomed the proposed expansion of caregiving relief, saying even a modest reduction in taxable income was better than none.

She suggested raising the tax relief ceiling for Employees Provident Fund (EPF) contributions from RM7,000 to RM10,000 to encourage more people to voluntarily contribute towards their retirement savings.

Medical consultant Dr Sarah Shaik Abdul Karim, 52, who cares for her elderly mother alongside other family members, also welcomed the proposed expansion of tax relief, particularly the broader definition of eligible care.

"As a doctor, I hope this mechanism will facilitate families caring for elderly people who are dependent on others for their daily activities," she said.

Sarah estimated that the proposed changes could save her about RM2,000 in income tax. She said clearer provisions on caregiving expenses would help families better understand how they could benefit from the expanded relief.

Improve cash flow

Meanwhile, bank employee Saro Gani, who lives in Rawang, Selangor, said the proposed tax changes could improve his family's cash flow.

The Sarawak-born father of four, whose children are aged between 12 and 24, also helps support his ageing parents.

"The money saved can at least go towards our daily expenses. With the new tax reliefs, I also feel some of the burden has been lifted when it comes to supporting my ageing parents and covering the rising cost of my children's education.

"As the breadwinner of my family, I find this very helpful as it eases some of my financial burden," he said.

Saro, however, was unsure how much he would save under the new measures. He said his tax savings in previous years had been less than RM1,000 and hoped the proposed changes would result in greater savings.

Tuition relief offers breather

Beyond elderly care, the proposed expansion of education-related tax relief could also help parents manage the rising costs of their children's education.

For head nurse Julia Abu Hassan Shaari, who works at a semi-government hospital, the proposed changes could allow her to enrol her children in more tuition classes next year.

The mother of four from Sungai Buloh, Selangor, currently spends RM65 a month on Mathematics and Science tuition for her eldest son, aged 11. She expects the expense to increase when she enrols her second child in tuition next year.

"The new tax breaks being proposed by the government are good because they cover a wider range of expenses.

“The majority of parents send their children for tuition, and each subject usually costs around RM75 a month," she said.

Julia said the proposed relief would give her more flexibility to spend on her children's education.

"I think in my case, the amount of tax relief is enough. Since the tax breaks will cover tuition fees, I might opt for more subjects for my kids next year," she said.

Julia also hoped the government would consider extending tax relief to extracurricular activities such as archery and martial arts, which she said had become increasingly common among children.

She welcomed the wider caregiving relief as well, given that she and her siblings jointly cover about RM1,000 in monthly expenses for their 79-year-old father, who has hypertension and diabetes.

On a side note, the healthcare worker also urged the government to review its policy for nurses' salary scale, saying that many are stuck at diploma-level pay grade despite possessing higher qualifications.

Not all stand to benefit equally

However, the proposed tax relief measures may offer less immediate benefit to those whose circumstances differ from those of working taxpayers.

Retired air force personnel Rafli Abd Latiff, 44, said most of the budget proposals would have little impact on him, although he welcomed financial assistance for retirees and the increase in the Early Schooling Aid to RM200 per pupil.

The father of six, whose children range in age from one to 19, also expressed concern that the government's proposal to raise the minimum wage from RM1,700 to RM2,000 beginning in June next year could push up prices.

He is also worried that younger workers might be encouraged to spend beyond their means as their earnings increase.