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The Definitive Guide To Personal Income Tax In Malaysia For 2016

Find out everything you need to know about filing your personal income tax in Malaysia by April 2016!

Chapter 5

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.

tax rates malaysia

With the changes to the tax brackets, here are the progressive income tax rates for Year of Assessment 2015:

Chargeable Income
Calculations
Rate
Tax
RM0 - RM2,500
On the First RM2,500
0%
RM0
RM2,501 - RM5,000
Next RM2,500
0%
RM0
RM5,001 - RM10,000
On the First RM5,000
RM0
Next RM5,000
1%
RM50
RM10,001 - RM20,000
On the First RM10,000
RM50
Next RM10,000
1%
RM100
RM20,001 - RM35,000
On the First RM20,000
RM150
Next RM15,000
5%
RM750
RM35,001 - RM50,000
On the First RM35,000
RM900
Next RM15,000
10%
RM1,500
RM50,001 - RM70,000
On the First RM50,000
RM2,400
Next RM20,000
16%
RM3,200
RM70,001 - RM100,000
On the First RM70,000
RM5,600
Next RM30,000
21%
Contribution
RM100,001 - RM150,000
On the First RM100,000
RM11,900
Next RM50,000
24%
RM12,000
RM150,001 - RM250,000
On the First 150,000
RM23,900
Next RM100,000
24%
RM24,000
RM250,001 - RM400,000
On the First RM250,000
RM47,900
Next RM150,000
24.5%
RM36,750
Exceeding RM400,000
On the First RM400,000
RM84,650
Next RM
25%
RM....

Here’s how you calculate your tax based on the personal income tax rate above:

Example:

Chargeable income: RM63,850

Income
Rate
Tax
First RM5,000
0%
RM0
Next RM5,000
1%
RM50
Next RM10,000
1%
RM100
Next RM15,000
5%
RM750
Next RM15,000
10%
RM1,500
Next RM13,850
16%
RM2,216
Total chargeable income: RM63,850
Total tax: RM4,616

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.

Too much math for you?
Go on to the Malaysia income tax calculator to calculate how much tax you will have to pay!

Image from SeniorLiving
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