Malaysia Lowers Personal Income Tax Rate for Middle-Income Earners in Revised Budget 2023

KUALA LUMPUR, Feb 24 - Malaysia's Finance Minister, Datuk Seri Anwar Ibrahim, announced a reduction in personal income tax rates for middle-income earners as part of the revised Budget 2023.

The tax rate will be lowered by two percentage points for those with annual earnings of RM100,000 or less, specifically within the RM35,000 to RM100,000 income bands. This tax adjustment is aimed at providing relief to 2.4 million taxpayers, allowing them to enjoy additional income of up to RM1,300.

However, the revised budget also includes an increase in taxes for higher-income individuals in the T20 group. For those earning between RM100,000 to RM1 million annually, tax rates will be raised from 0.5% to 2%. This progressive approach is designed to ensure that individuals with higher incomes bear a slightly greater tax burden, contributing to a more equitable taxation system.

The government estimates that these changes will reduce its net tax revenue by RM900 million. Still, the primary goal is to benefit the people, particularly those in the M40 income group, which includes middle-income earners. The lower tax rates for the M40 are intended to help them cope with living costs, while the B40 group has already received various forms of aid.

These tax adjustments are part of the government's efforts to strike a balance between stimulating economic growth and ensuring social equity in the face of economic challenges and rising living costs. The revised budget aims to create a more progressive tax structure that takes into account the varying income levels of Malaysian citizens.