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THE individual tax relief structure requires urgent review to ensure it reflects the increasing cost of living, according to economic analyst Prof Emeritus Dr Barjoyai Bardai.
Dr Barjoyai highlighted that current reliefs remain inadequate, citing RM2,000 per year for children under 18 and RM4,000 per year for a spouse with no income.
“The existing structure is indeed low compared with the actual cost of raising children and supporting a non-working spouse, yet the government has maintained these figures,” he told Berita Harian today.
He noted that while some categories of relief have been increased for the 2025 Assessment Year, the RM2,000 and RM4,000 figures remain unchanged.
“With inflation and rising family care costs, these amounts certainly warrant a review,” he said.
The analyst acknowledged that the government has begun expanding certain relief categories, particularly to address household financial pressures.
These include broader medical expense relief now covering grandparents and wider health check-ups, alongside an increase in tax relief for persons with disabilities from RM6,000 to RM7,000.
“This step shows the government recognises that the old relief structure is misaligned with current living costs and represents a necessary correction,” he added.
Prof Barjoyai also emphasised that Malaysia has not conducted a comprehensive review of personal tax relief rates for many years.
While Budget 2025 raised some relief categories, such as education fees, and the Inland Revenue Board gradually updated relief levels for 2024 and 2025, a full structural review has yet to take place.
“It is time for the government to undertake a thorough reform, as many base rates have remained unchanged for more than a decade,” he said.
Increasing reliefs would directly benefit middle-income households (M40), he said, reducing taxable income and lowering effective tax liabilities. “Each additional RM1,000 of relief can save between RM100 and RM300, depending on individual tax rates. Increases in medical relief and for children with disabilities also help households with higher dependents,” he explained.
According to the ASEAN 6 Tax Guide 2026, Malaysia provides multiple categories of tax relief, though the structure is detailed and complex compared with neighbouring countries such as Singapore and Indonesia, which employ simpler rebates or deductions. Malaysia’s maximum personal income tax rate is 30 per cent, higher than Singapore (24 per cent) but comparable with Thailand and Indonesia (35 per cent).
“In terms of taxpayer support, Malaysia is not lagging, but the structure emphasises numerous categories with low values, whereas other countries tend to offer broader, more inclusive reliefs. It is time for a comprehensive reform, not just incremental increases with every budget,” Prof Barjoyai said. - March 12, 2026