Savings Strategies

8 Personal Income Tax Reliefs You Can Claim in 2023

CIMB ❘ 27 Feb 2023

4 min(s) read

It’s personal income tax season again! If you earn more than RM34,000 per year (after deductions) in Malaysia, then you have to file your income tax with LHDN.

Take note that you need to file your income tax form for the assessment year of 2022 by 30 April 2023 (for manual BE form) or by 15 May 2023 (for online e-BE form).

So, what are LHDN’s income tax relief that’s eligible for taxpayers in 2023? We highlight the top 8 personal income tax updates and reliefs so that you’ll know what’s claimable to achieve the best tax efficiency.

Tax Rate Reduction for Two Tax Brackets

The updated Budget 2023 saw reduced tax rates for a few ranges of taxable income (RM35,000 - RM50,000, RM50,001- RM70,000, and RM70,001- RM100,000). This reduction benefits taxpayers from middle-income (M40) households, increasing their disposable income and contributing to wealth creation.

Also, tax rates for taxpayers earning between RM100,000 - RM400,000 and will be standardised to 25%, while income above RM600,001 will be increased to 28%. With this update, the new income tax structure is as follows:

Chargeable Income (RM)	2022 Income Tax Rate (%)	2023 Income Tax Rate (%)
0 - 5,000	0	0
5,001 - 20,000	1	1
20,001 - 35,000	3	3
35,001 - 50,000	8	6
50,001 - 70,000	13	11
70,001 - 100,000	21	19
100,000 - 250,000	24	25
250,001 - 400,000	24.5	25
400,001 - 600,000	25	26
600,001 - 1,000,000	26	28
1,000,000 - 2,000,000	28	28
More than 2,000,000	30	30

Tax Exemption for Women After Career Breaks

For women returning to the workforce, there’s a women-centric career comeback incentive for you! Eligible women returnees are entitled to income tax exemptions for five consecutive years of assessment (YA) from 2023 to 2028.

This exemption is implemented to attract and retain female talent in the workforce, providing them with much-needed social and financial dignity. Aside from solidifying women’s presence in the work world, the national budget also helps to bridge the gender gap in employment.

Tax Relief for Medical Expenses: Now Include Dental Treatments

Budget 2023 offers comprehensive tax relief for medical treatment expenses, which now include dental treatment and examinations. This tax benefit applies to:

Serious illness for the taxpayer, spouse or child;
Fertility treatment for taxpayer or spouse;
Vaccination for the taxpayer, spouse or child limited to RM1,000;
Full medical check-up, mental health check-up or consultation, COVID-19 detection test including the purchase of self-test kit for the taxpayer, spouse or child limited to RM8,000; and
Dental treatment and examinations of up to RM1,000 performed by dental practitioners registered under the Malaysian Dental Council.

Expansion of Tax Relief for COVID-19 Detection Test Scope

Next, you can claim income tax relief of up to RM1,000 for COVID-19 detection test expenses, including:

COVID-19 detection test fees performed in a hospital or a clinic evidenced by a receipt issued by the hospital/clinic/medical practitioner registered under the Malaysian Medical Council;
Purchase of a self-detection test kit supported with a receipt; and now including;
Fees for tests carried out in a laboratory recognised by the Ministry of Health Malaysia

Expansion of Tax Relief for Life Insurance Premiums to Include EPF Self-Contribution

Additionally, you can reduce chargeable income by claiming the reliefs offered for your life insurance premiums or takaful contributions:

Pensionable public servants: limited to RM7,000
Non-public servants: limited to RM3,000

Propelling Malaysians to replenish their EPF savings, Budget 2023 has made the EPF self-contribution claimable up to RM3,000 under this new expansion of tax relief for life insurance. Not just that, the self-contribution cap has also been raised from RM60,000 to RM100,000 per year.

Extension of Tax Relief for Payment of Nursery and Kindergarten Fees

For parents with young kids, here’s a helpful incentive for you! Effective until YA 2024, this relief is designed to provide a support system for parents and facilitate child care during working hours. You may receive up to RM3,000 of tax relief for nursery and kindergarten fees for children aged 6 years and below.

However, it’s important to ensure that your kids are enrolled in a registered child care centre (with the Director General of Social Welfare under the Child Care Centre Act 1984) or kindergarten (under the Education Act 1996).

Extension of Tax Relief for the National Education Savings Scheme (SSPN)

To encourage debtors to pay off their loans and promote saving habits, Budget 2023 provides income tax relief up to RM8,000 until YA 2024 for net annual savings in SSPN.

Other student debt reductions assistance include:

20% off outstanding PTPTN loan balance upon full settlement between 1 November 2022 to 30 April 2023

15% discount off outstanding PTPTN loan balance for debtors who pay off at least 50% of their remaining debt in a single payment or opt for salary deduction or scheduled direct debit between 1 November 2022 to 30 April 2023

Other Tax Reliefs to Keep in Mind

Stackable tax relief for the purchase of handphones, tablets, and personal computers: up to RM2,500
Tax relief for SOCSO contributions: up to RM350, expanded to include contributions via Malaysia’s Employment Insurance System (EIS)
Tax relief for deferred annuity and Private Retirement Scheme (PRS): up to RM3,000, extended until YA 2025
Concessionary tax rate for C-suite in the Electrical & Electronic (E&E) sector: 15% flat tax rate

In conclusion, understanding income tax relief is pertinent to reducing your overall tax bills. Most importantly, keep your receipts and purchases, and leverage the many tax reliefs for significant income tax savings!

Are you a beginner in the tax-paying world? Check out our Life Goals articles for beginner-friendly tips to file your income tax and become a savvy taxpayer in no time. Happy filing!

This article is for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.

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