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AS the annual income tax filing season approaches, Malaysians are scrutinising the RM37,333 personal tax exemption threshold, with many arguing that the nation’s system of personal tax reliefs is outdated and in need of a thorough overhaul.
Taxpayers have expressed frustration that the current web of deductions is overly complex, while relief amounts fail to reflect the actual cost of household living.
Experts have cautioned that the tax-free income threshold should not be mistaken for the RM9,000 personal tax relief, as it is a technical feature of Malaysia’s progressive tax framework rather than a separate policy initiative.
“The tax-free income threshold has been in place since the year of assessment 2023 and is derived from Malaysia’s progressive tax rate structure, a RM9,000 personal relief and a RM400 tax rebate for chargeable income of RM35,000 or below,” The Star reported Datin Christine Koh, managing director of Owen KLCA PLT saying.
Koh added that despite these measures, the thresholds remain low when compared with actual household expenditures, particularly for families facing rising living costs.
“This is because tax reliefs apply only to specific categories of spending rather than overall living costs,” she said in an interview.
She noted that several key reliefs, including the RM9,000 personal relief, have remained unchanged since 2010, creating a growing gap between statutory allowances and the financial realities confronting many Malaysian households.
“The thresholds have not evolved in line with inflation or the increasing cost of living, which means families may still find themselves paying tax even when their disposable income is under significant pressure,” Koh added.
With tax season underway, calls are mounting for policymakers to review and modernise Malaysia’s personal tax relief system to ensure it better reflects the economic challenges faced by ordinary citizens. - February 2, 2026