From 1 January 2027, families paying for elderly care won’t pay service tax on care fees of up to RM96,000 a year. The service tax rate on elderly care services also drops from 8% to 6%. Prime Minister Datuk Seri Anwar Ibrahim announced both changes when he tabled Budget 2027 in the Dewan Rakyat on 9 October.
Malaysia is expected to become an aged society by 2030, when about 15% of people will be aged 60 and above, according to the Ministry of Finance’s pre-budget statement. Budget 2027 also widens tax relief for adults looking after their parents and grandparents.
No Service Tax On Care Fees Up To RM96,000
The RM96,000 limit works out to RM8,000 a month (our calculation). If your family pays less than this for a parent’s care home or daycare centre, you’ll pay no service tax on those fees from January.
On a care home fee of RM4,000 a month, or RM48,000 a year, the 8% service tax today adds RM3,840 a year. From 2027, that RM3,840 goes away (our calculation). Anwar didn’t explain how care fees above RM96,000 a year will be taxed. The new 6% rate is likely to apply to that part, but this hasn’t been confirmed.
Tax Relief Covers All Care Costs For Parents And Grandparents
Right now, you can claim up to RM8,000 a year in tax relief for your parents’ medical bills, carer costs, and check-ups. Under Budget 2027, this relief will cover all care costs, not just medical ones, and will include grandparents too.
Anwar didn’t say whether the RM8,000 limit will change, or from which year of assessment the wider relief applies. Our income tax relief guide lists what you can claim for this year’s filing.
More Help For Seniors And Their Carers
Bantuan Warga Emas, the monthly welfare payment for poor seniors, goes up to RM1.3 billion next year, for almost 200,000 recipients. A new Senior Citizens Bill will also be passed to deal with neglect of older people.
More than RM40 million through HRD Corp will train 8,000 people to work in elderly care. At 55 and 60, EPF members can also choose the i-Emas scheme, which pays out their savings monthly so that the balance left in EPF keeps earning dividends. Primary carers of seniors, people with disabilities (OKU), and people with long-term illnesses can now apply to leave bankruptcy faster under the Second Chance policy.
Care Fees And Tax Relief Together
For a family paying RM4,000 a month for a care home, the service tax exemption saves RM3,840 a year. If the parents’ relief stays at RM8,000 and you’re in the 11% tax band, claiming it in full cuts your income tax by another RM880 (our calculation).
That’s about RM4,720 a year in total, against RM48,000 in care fees. Most of the cost still falls on the family. Keep every care bill and receipt from 1 January 2027, because both the exemption and the wider relief depend on paying for care that you can show proof of.
The post Budget 2027: Elderly Care Fees Up To RM96,000 A Year Tax-Free appeared first on RinggitPlus.
