(Tax Update) Malaysia Budget 2025 - Individual

(Tax Update) Malaysia Budget 2025 - Individual

The Budget 2025 has brought several changes to individual tax reliefs and exemptions, designed to support personal well-being, family care, and sustainable practices.

Let’s walk you through the highlights of what’s changing for you and how these updates might benefit your personal financial planning. From expanded childcare reliefs to foreign income exemptions, here are the key points at a glance.

1. Dividend Tax on Individual Shareholders

  • Tax Rate: 2% on annual dividend income exceeding RM100,000.

  • Exemptions: Dividends from KWSP, LTAT, ASNB, or any unit trust.

  • Effective: Year of Assessment (YA) 2025.

2. Foreign Source Income (FSI) Exemption

  • Extension: FSI received by individuals in Malaysia remains tax-exempt until 31 December 2036, as long as it is taxed in the source country.

3. Child and Elderly Care Allowance

  • Relief: Up to RM3,000 per year.

  • New Inclusion: Now extends to elderly care for parents and grandparents.

  • Effective: YA 2025.

4. Expanded Medical Reliefs for Families

  • Scope Increase: RM6,000 limit (previously RM4,000) for medical expenses and treatments, covering:

    • Diagnostic tests (e.g., blood tests, ultrasounds, mammograms).

    • Mental health consultations and complete medical exams.

    • Self-monitoring tools (e.g., glucometers, pulse oximeters).

    • Self-test kits for illnesses like influenza.

  • Children with Learning Disabilities: Relief increased to RM6,000, covering diagnostic and rehabilitation expenses.

  • Effective: YA 2025.

5. Reliefs for Disabled Individuals and Their Families

  • Increased Limits:

    • RM7,000 (up from RM6,000) for disabled taxpayers.

    • RM6,000 (up from RM5,000) for taxpayers with a disabled spouse.

    • RM8,000 (up from RM6,000) for taxpayers with a disabled, unmarried child.

  • Effective: YA 2025.

6. Expanded Reliefs for Sports and Elderly Care

  • What’s New:

    • Sports activities now include participation with parents.

    • Vaccination costs added to complete medical examinations for parents (limited to RM1,000).

    • Expenses for medical treatment and special needs now extend to grandparents.

  • Effective: YA 2025.

7. Deferred Annuity and PRS Relief

  • Extension: Available until YA 2030.

8. Education and Medical Insurance

  • Increased Limit: RM4,000 (previously RM3,000).

  • Effective: YA 2025.

9. SSPN Contributions

  • Extension: Tax relief continues until YA 2027, subject to new conditions.

10. Relief on Housing Loan Interest

  • Two-Tier Relief:

    1. RM7,000 for houses priced up to RM500,000.

    2. RM5,000 for houses priced between RM500,001 and RM750,000.

  • Conditions: Applicable to the first residential home loan, provided the house generates no rental income. The sale and purchase agreement (SPA) must be executed between 1 January 2025 and 31 December 2027.

11. Childcare Fees Relief

  • Limit: RM3,000 annually for fees paid to registered childcare centres or kindergartens.

  • Effective: YA 2025 to YA 2027.

12. Electric Vehicle Charging and Food Waste Solutions

  • Relief: Up to RM2,500 for EV charging facilities and newly added food waste composting machines for household use.

  • Effective: YA 2025 to YA 2027.

These changes reflect a more family-focused and environmentally conscious approach to individual tax planning. Make sure to take full advantage of these enhanced reliefs and exemptions in your 2025 tax filings.

Need help navigating these updates? Our team at KTP is here to guide you. Feel free to contact us with any questions or for further assistance in planning your taxes.

Past Update on Budget 2025

  • Dividend Income : https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024

  • HR : https://www.ktp.com.my/blog/malaysia-budget-2025-hr/23oct2024

  • Companies : https://www.ktp.com.my/blog/malaysia-budget-2025-companies/24oct2024

PS : Authored by Ms Lim Nguan Lian, our head of client relationship, on her personal LinkedIn.

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