{"id":55845,"date":"2024-12-03T10:13:05","date_gmt":"2024-12-03T02:13:05","guid":{"rendered":"http:\/\/wordpress-my-161844363.ap-southeast-1.elb.amazonaws.com\/articles\/?p=55845"},"modified":"2024-12-05T12:25:02","modified_gmt":"2024-12-05T04:25:02","slug":"income-tax-bracket-explained","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/income-tax-bracket-explained","title":{"rendered":"Income Tax Brackets Explained (And How Much You Have To Pay)"},"content":{"rendered":"<p>There\u2019s a running joke that just like a majority of the western world, Malaysia also has four seasons. But instead of the seasons being summer, winter, autumn and spring, in Malaysia we have the tax season, haze season, durian season, and the monsoon season.<\/p>\n<p>One of those seasons; the tax season is just around the corner in 2025. We\u2019re here to help you navigate this harrowing season successfully. How? We\u2019re going to explain just how the tax income brackets work, and just how much you have to pay in your taxes.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Explaining-income-tax-brackets\"><\/span><strong>Explaining income tax brackets<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The first mistake people make is asking which tax bracket they fall into. In reality, your income is likely to cross several tax brackets &#8211; all of which apply one after another.<\/p>\n<div class=\"block\"><div>With the tabling of <a href=\"https:\/\/www.imoney.my\/articles\/budget-2024-winners\" target=\"_blank\" rel=\"noopener\">Budget 2024<\/a>, those earning between RM70,000 to RM100,000 a year will enjoy a reduction in income tax. If your taxable income is between RM50,001 and RM70,000, you can enjoy a reduction in tax from 13% to 11%. As for those with taxable incomes in the RM70,001 to RM100,000 bracket your tax is also reduced from 21% to 19%.<\/div><\/div>\n<p>To begin, here\u2019s a table of the income tax brackets for the year of assessment 2024 (tax filing in 2025).<\/p>\n\n<table id=\"tablepress-1159\" class=\"tablepress tablepress-id-1159 tbody-has-connected-cells\">\n<thead>\n<tr class=\"row-1\">\n\t<th class=\"column-1\">Chargeable Income<\/th><th class=\"column-2\">Calculations (RM)<\/th><th class=\"column-3\">Rate %<\/th><th class=\"column-4\">Tax(RM)<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-striping row-hover\">\n<tr class=\"row-2\">\n\t<td class=\"column-1\">0 - 5,000<\/td><td class=\"column-2\">On the First 2,500<\/td><td class=\"column-3\">0<\/td><td class=\"column-4\">0<\/td>\n<\/tr>\n<tr class=\"row-3\">\n\t<td rowspan=\"2\" class=\"column-1\">5,001 - 20,000<\/td><td class=\"column-2\">On the First 5,000<\/td><td rowspan=\"2\" class=\"column-3\">1<\/td><td class=\"column-4\">0<\/td>\n<\/tr>\n<tr class=\"row-4\">\n\t<td class=\"column-2\">Next 15,000<\/td><td class=\"column-4\">150<\/td>\n<\/tr>\n<tr class=\"row-5\">\n\t<td rowspan=\"2\" class=\"column-1\">20,001 - 35,000<\/td><td class=\"column-2\">On the First 20,000<\/td><td rowspan=\"2\" class=\"column-3\">3<\/td><td class=\"column-4\">150<\/td>\n<\/tr>\n<tr class=\"row-6\">\n\t<td class=\"column-2\">Next 15,000<\/td><td class=\"column-4\">450<\/td>\n<\/tr>\n<tr class=\"row-7\">\n\t<td rowspan=\"2\" class=\"column-1\">35,001 - 50,000<\/td><td class=\"column-2\">On the First 35,000<\/td><td rowspan=\"2\" class=\"column-3\">6<\/td><td class=\"column-4\">600<\/td>\n<\/tr>\n<tr class=\"row-8\">\n\t<td class=\"column-2\">Next 15,000<\/td><td class=\"column-4\">900<\/td>\n<\/tr>\n<tr class=\"row-9\">\n\t<td rowspan=\"2\" class=\"column-1\">50,001 - 70,000<\/td><td class=\"column-2\">On the First 50,000<\/td><td rowspan=\"2\" class=\"column-3\">11<\/td><td class=\"column-4\">1,500<\/td>\n<\/tr>\n<tr class=\"row-10\">\n\t<td class=\"column-2\">Next 20,000<\/td><td class=\"column-4\">2,200<\/td>\n<\/tr>\n<tr class=\"row-11\">\n\t<td rowspan=\"2\" class=\"column-1\">70,001 - 100,000<\/td><td class=\"column-2\">On the First 70,000<\/td><td rowspan=\"2\" class=\"column-3\">19<\/td><td class=\"column-4\">3,700<\/td>\n<\/tr>\n<tr class=\"row-12\">\n\t<td class=\"column-2\">Next 30,000<\/td><td class=\"column-4\">5,700<\/td>\n<\/tr>\n<tr class=\"row-13\">\n\t<td rowspan=\"2\" class=\"column-1\">100,001 - 250,000<\/td><td class=\"column-2\">On the First 100,000<\/td><td rowspan=\"2\" class=\"column-3\">25<\/td><td class=\"column-4\">9,400<\/td>\n<\/tr>\n<tr class=\"row-14\">\n\t<td class=\"column-2\">Next 300,000<\/td><td class=\"column-4\">75,000<\/td>\n<\/tr>\n<tr class=\"row-15\">\n\t<td rowspan=\"2\" class=\"column-1\">250,001 - 400,000<\/td><td class=\"column-2\">On the First 400,000<\/td><td rowspan=\"2\" class=\"column-3\">26<\/td><td class=\"column-4\">84,400<\/td>\n<\/tr>\n<tr class=\"row-16\">\n\t<td class=\"column-2\">Next 200,000<\/td><td class=\"column-4\">52,000<\/td>\n<\/tr>\n<tr class=\"row-17\">\n\t<td rowspan=\"2\" class=\"column-1\">400,001 - 600,000<\/td><td class=\"column-2\">On the First 600,000<\/td><td rowspan=\"2\" class=\"column-3\">28<\/td><td class=\"column-4\">136,400<\/td>\n<\/tr>\n<tr class=\"row-18\">\n\t<td class=\"column-2\">Next 1,400,000<\/td><td class=\"column-4\">392,000<\/td>\n<\/tr>\n<tr class=\"row-19\">\n\t<td rowspan=\"2\" class=\"column-1\">Exceeding 2,000,000<\/td><td class=\"column-2\">On the First 2,000,000<\/td><td rowspan=\"2\" class=\"column-3\">30<\/td><td class=\"column-4\">528,400<\/td>\n<\/tr>\n<tr class=\"row-20\">\n\t<td class=\"column-2\">Next ringgit<\/td><td class=\"column-4\">---<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<!-- #tablepress-1159 from cache -->\n<p><span style=\"font-weight: 400;\">As you can see from this table, the rate at which you will be taxed is determined by how much chargeable income you make annually. These tax brackets are imposing on a progressive scale. Which means that you won\u2019t be charged a 11% income tax rate if your total taxable income is RM70,000 a year.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How-your-actual-income-tax-rate-is-calculated\"><\/span>How your actual income tax rate is calculated<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><div class=\"block\"><div>Your income is divided up first &#8211; and each section is taxed at a different rate. For example:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your annual income is RM50,000 a year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The first RM5,000 you earned is not taxable &#8211; you pay nothing.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Next RM15,000 you earned is taxed at 1%, so you pay RM150.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The next RM15,000 is taxed at 3%, so you pay RM450 for this bracket.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The next RM15,000 is taxed at 8%, so you pay RM1,200 for this bracket.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So the total tax you pay is RM150 + RM450 + RM1,200 = RM1,800.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is lower than if you were just taxed 8% on the whole RM50,000 (which would be RM4,000).<\/div><\/div><\/span><\/p>\n<p><span style=\"font-weight: 400;\">The table above simplifies the calculation by giving you the total amount of taxes in the brackets before your highest bracket (because you are taxed the maximum amount in those brackets). This is what it means when it says \u201cOn the first XXXXX amount\u201d.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Determining-your-chargeable-income\"><\/span><b>Determining your chargeable income<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">So how exactly do you calculate your chargeable income?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your chargeable income is total annual income, minus all your applicable <a href=\"https:\/\/www.imoney.my\/articles\/income-tax-guide-malaysia\/personal-tax-relief\">tax relief<\/a> and <a href=\"https:\/\/www.imoney.my\/articles\/income-tax-guide-malaysia\/what-is-a-tax-exemption\">tax deductions<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s an example to help you visualize it;<\/span><\/p>\n<p><a href=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171403\/Mini-infogs-Income-tax-guide-2016_1-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-55849 size-full\" src=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171403\/Mini-infogs-Income-tax-guide-2016_1-1.png\" alt=\"\" width=\"800\" height=\"357\" srcset=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171403\/Mini-infogs-Income-tax-guide-2016_1-1.png 800w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171403\/Mini-infogs-Income-tax-guide-2016_1-1-300x134.png 300w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171403\/Mini-infogs-Income-tax-guide-2016_1-1-768x343.png 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">From this image, you can see that Ash\u2019s total annual income (which means the salary from his job plus any other money he earned in the year) is RM84,300. But what\u2019s his chargeable income?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s Ash\u2019s chargeable income;<\/span><\/p>\n<p><a href=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171816\/income_tax_chargeable-income.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-55850 size-full\" src=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171816\/income_tax_chargeable-income.jpg\" alt=\"\" width=\"800\" height=\"658\" srcset=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171816\/income_tax_chargeable-income.jpg 800w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171816\/income_tax_chargeable-income-300x247.jpg 300w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/21171816\/income_tax_chargeable-income-768x632.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">So as you can see from this mini infographic, Ash falls into Category E in the income tax bracket. For Category E, he will be taxed 13% of his chargeable income for the first RM50,000. He will be taxed another 13% for the next RM20,000, which means that he needs to pay RM6500 in taxes for this year.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Use-our-Malaysia-LHDN-eFiling-guide-and-income-tax-calculator\"><\/span><b>Use our Malaysia LHDN eFiling guide and income tax calculator<\/b><b><br \/>\n<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">So there you have it, a breakdown of all the tax income brackets. We hope this helps you find out where you belong to in the tax income brackets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Still have questions about income tax? Why not check out our <strong><a href=\"https:\/\/www.imoney.my\/articles\/income-tax-guide-malaysia\/personal-income-tax-guide\" target=\"_blank\" rel=\"noopener\">complete and comprehensive income tax guide<\/a><\/strong>\u00a0or use the <a href=\"https:\/\/www.imoney.my\/calculator\/income-tax-calculator\" target=\"_blank\" rel=\"noopener\">iMoney income tax calculator<\/a> to find out how much you need to pay.<\/span><\/p>\n<p><a href=\"https:\/\/www.imoney.my\/calculator\/income-tax-calculator\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-61828\" src=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/23131151\/income-tax-calculator-banner-1200x500-en-opt.png\" alt=\"iMoney income tax calculator\" width=\"1200\" height=\"500\" srcset=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/23131151\/income-tax-calculator-banner-1200x500-en-opt.png 1200w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/23131151\/income-tax-calculator-banner-1200x500-en-opt-300x125.png 300w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/23131151\/income-tax-calculator-banner-1200x500-en-opt-800x333.png 800w, https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2023\/03\/23131151\/income-tax-calculator-banner-1200x500-en-opt-768x320.png 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/a><\/p>\n<h6><em>This article has been updated on December 3, 2024.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>Here\u2019s a simple explanation of income tax brackets to help you understand better just how much you should be paying for income tax in 2025.<\/p>\n","protected":false},"author":51,"featured_media":55852,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[619,888,254,215],"tags":[208,303],"class_list":["post-55845","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget-2021-malaysia","category-budget-2022","category-income","category-tax","tag-featured","tag-income-tax"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Here\u2019s An Explanation Of Tax Brackets And How It Works<\/title>\n<meta name=\"description\" content=\"How do you know how much income tax to pay? 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