Tax Rates For Year Of Assessment 2015 (Tax Filed In 2016)
Now that you understand how to derive your chargeable income to file for your 2016 income tax, we can calculate how much tax you will be paying for last year’s assessment.
For taxes to be filed this year, the personal tax rates for 2016 have been reduced – which means more tax savings for us. During Budget 2015 announcement in October 2014, a decrease in income tax rates across the board was announced for Year of Assessment 2015. According to the Finance Minister and Prime Minister, Datuk Seri Najib Tun Razak, this measure would mean 300,000 individual will no longer pay income tax as compared to only 170,000 taxpayers in Year of Assessment 2014.
Personal income tax rates Malaysia 2016 will be reduced by 1% to 3% and the announcement also includes the addition of two more tax bands – RM100,001 to RM250,000 and RM250,001 to RM400,000. The maximum rate for income tax is increased from exceeding RM100,000 to exceeding RM400,000 with the tax rate for those earning more than RM100,000 annually reduced from 26% to 24%, 24.5% and 25%.
This was a big change since those earning RM100,000 and above are no longer in the highest bracket which can significantly impact the payable tax amounts for those in the upper-middle class whom can be earning just above RM100,000.
With the changes to the tax brackets, here are the progressive income tax rates for Year of Assessment 2015:
Here’s how you calculate your tax based on the personal income tax rate above:
Chargeable income: RM63,850
You can calculate your taxes based on the formula above, and just make sure your total income in the first column comes up to your total chargeable income.