tax relief malaysia

Your Comprehensive Guide To Tax Relief in Malaysia 2025

Managing finances in Malaysia means navigating income tax, a task that comes with its share of responsibilities and hurdles. Given that tax liabilities can reach significant sums, investing time and resources in professional taxation services seems like a wise choice.

However, it’s not solely about obligations. The system also provides a range of reliefs and incentives designed to lighten the financial load for individuals and corporations alike.

While individual savings might appear modest at times, the cumulative effect over years can be substantial! This article would serve as a comprehensive guide of everything you can claim to maximise your tax refund.

What is Tax Relief

Tax relief is a way to reduce your taxable income. It allows you to deduct certain expenses from your total income, leading to a lower tax bill. This process is important for anyone wanting to handle their finances better, as it allows you to keep more of your hard-earned money in a legal and safe manner.

Tax Relief Malaysia Eligibility

To qualify for tax relief, certain criteria must be met. Tax relief Malaysia eligibility often depends on your residency status, income level, and the nature of the expense. Some general points to consider:

Residency: Generally, only individuals who are deemed tax residents within Malaysia can take advantage of the various relief provisions. This status is determined by the length of your stay in the country within a given tax year, with specific criteria put in place by the LHDN to define residency.

Documentation: To support any relief claims, it is necessary to maintain adequate records. These documents, like receipts and invoices, should accurately reflect the expenses you’ve incurred, as the LHDN may request them for verification purposes.

Specific Conditions: Each type of tax relief offered comes with its own set of rules and limitations. It’s important to understand these specific requirements, as eligibility depends on meeting them precisely.

Key Tax Relief Categories in Malaysia

Malaysia offers a range of tax reliefs, each catering to different aspects of life. Here are some significant categories: 

 

CategoryWhat It CoversMaximum Deduction (RM)
Personal and Dependent RelativesBasic relief for yourself and the people you support.9,000
Parental Medical and Dental Care

Costs for specialised medical and dental treatments for parents, including caregiving.

Complete medical examination (Restricted to RM1,000)

8,000 
Support Equipment Purchase For Disabled PersonsItems like wheelchairs and prosthetics if needed by you or a family member with disabilities.6,000 
Relief for Disabled PersonsAdditional relief if you have a disability.6,000
Education Fees (Self)Fees paid for courses to improve your skills or for higher education like diplomas or degrees.
Courses taken for the purpose of upskilling (restricted to RM, 2000)		7,000 
Medical Expenses (Self, Spouse, Children)

Costs for serious illnesses, fertility treatments, vaccination  and regular dental check-ups.

Vaccination and Dental is restricted RM 1,000 respectively,

10,000 
General Health Check-ups and Related CostsGeneral medical check-ups, COVID-19 tests, and mental health consultations.1,000 
Children with Disabilities ExpensesCosts for assessments, intervention programs, and rehabilitation for children with disabilities.4,000 
Lifestyle PurchasesSpending on books, digital devices, internet, and personal development.2,500 
Sports Activities CostsExpenses on sports equipment, gym memberships, and related fees.1,000 
Breastfeeding Equipment CostsItems for breastfeeding mothers with young children.1,000 
Childcare CostsPayments made to registered childcare centers and kindergartens.3,000 
Education Savings (SSPN)Money saved in the National Education Savings Scheme for children’s future education.8,000 
Support Payments to SpouseAlimony or support paid to a former spouse, if legally mandated.4,000 
Relief for Disabled SpouseExtra relief if your spouse has a disability.5,000
Child Relief (Under 18)For unmarried children below 18 years old.2,000
Child Relief (Higher Education)For unmarried children over 18 in full-time education.2,000 – 8,000
Relief for Disabled ChildrenExtra help if you have children with disabilities, with more help for those in higher education.6,000 (+ 8,000 if Higher education)
EPF, Life Insurance, and TakafulPayments to retirement funds, life insurance, and Islamic insurance.7,000 
Private Retirement Savings (PRS)Money saved in private retirement schemes.3,000 
Education and Medical Insurance PremiumsCosts for education and health insurance.3,000 
SOCSO ContributionsPayments made to the social security scheme.350 
EV charger Installation CostsCosts of installing an electrical vehicle charger in your home, for personal use.2,500

Disclaimer: For the most up to date information, please visit LHDN’s official website.

How to Claim Tax Relief Malaysia

With the categories of tax reliefs all well known, it’s time to initiate the process of claiming those sweet reliefs. The process of claiming tax relief is typically done during the annual income tax filing. This involves:

Gathering Documentation

To properly claim your entitlements, it’s important you compile all supporting paperwork. This means securely storing receipts and invoices that demonstrate your qualifying expenditures. LDHN is meticulous when it comes to verification so be sure to be thorough with your documentation. 

These documents serve as proof of your spending when you present your tax return.

Completing The Tax Form

You’ll need to accurately populate the income tax return, which is the Form BE or B, with your financial information. This involves detailing your earnings and inputting the appropriate figures for each relief you intend to claim, with precision.

Submitting The Form

Once completed, you must provide your tax form to LHDN. Fortunately with the power of digitalisation you have the option to perform this action electronically through their online portal or if you prefer to do it physically, you go to LHDN and hand in a paper copy.

Keeping Records

It’s good practice to retain copies of all documents submitted to the LHDN. These records are helpful if any queries arise in the future and also aid in your own financial record-keeping.

Tax Deduction

In Malaysia, tax deductions refer to expenses that can be subtracted from your aggregate income (the total income of the entire year), thus reducing the amount of total income that is subject to taxation. 

This is different from tax relief which reduces your chargeable income. To put it simply, deductions work on your gross income, before the government applies any standard allowances. 

So, deductions lower your starting point, and reliefs lower the amount you are taxed on after some initial reductions. A win for taxpayers.

Types of Items Subjected to Tax Deductions

Donations

Contributions to approved charities, sports activities, and projects of national interest are permissible deductions. The amount that can be deducted is often subjected to limits, frequently a percentage of your aggregate income.

Gifts

Certain gifts, such as those of historical artifacts to the government, monetary donations to libraries, and expenses for disability access in public spaces, qualify for deductions.

There are often value limits on the gift that can be deducted.

Business Expenses (for Self-Employed and Businesses)

For individuals who are self-employed or operate businesses, a range of operational costs can be deducted. These include expenses directly related to the business’s daily functions.

Specific business related deductions include Capital allowances, interest expenses, and bad debts. Bad debts are only deductible under specific conditions that must be met.

Capital allowances, which account for the depreciation of business assets, and interest expenses related to income generation, are also deductible.

Conclusion On Tax Relief in Malaysia 2025

So, when tax season rolls around, remember about the list of relief you can claim and save your hard-earned money.

If the whole process feels a bit overwhelming, you’re not alone. Many people find taxes a bit of a headache. 

That’s where we can help.

At Accounting.My, we understand the ins and outs of Malaysian taxation laws and can ensure you claim everything you’re entitled to, without any stress! We provide comprehensive taxation services from advisory compliance to personal tax service preparations.

Visit us today to learn more and minimise your taxation burden!

Map Direction to Accounting.my Malaysia

https://goo.gl/maps/32Rgr7ZCf7aN72Km7 


Don’t let taxes ruin your day. Let us solve your taxation burdens

Frequently Asked Questions About Tax Relief in Malaysia

Can I Claim Tax Relief For Expenses Paid For My Parents Living Overseas?

This depends on their dependency status and whether they are Malaysian residents. Generally, overseas living expenses are not eligible, unless specific conditions are met regarding their dependency.

What Happens If I Forget To Claim A Tax Relief During My Initial Filing?

You can usually file an amended tax return with the LHDN within a certain timeframe. However, it’s best to ensure accuracy during the initial filing to avoid complications.

Are There Any Tax Reliefs For Specific Medical Conditions Or Disabilities?

Yes. There are reliefs for certain medical expenses and for disabled individuals, with specific requirements for documentation and certification.

Can I Claim Tax Relief For Educational Expenses For Online Courses?

Reliefs for education are generally limited to specific levels and types of courses. Online courses may qualify if they meet certain criteria defined by LHDN.

Are There Any Tax Reliefs For Investments In Specific Financial Instruments?

Yes. There are reliefs for certain investments, such as contributions to the Private Retirement Scheme (PRS). The exact conditions and limits vary.

If I Change Jobs Mid-Year, How Does That Affect My Tax Relief Eligibility?

Your eligibility is determined based on your total income and expenses for the entire assessment year, regardless of job changes. However, properly documenting your income from each employer is essential.

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