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MALAYSIANS filing their tax returns this year will encounter a significant change to the treatment of dividend income alongside a raft of expanded reliefs aimed at families, caregivers and first-time homebuyers.
For the first time, dividend income will no longer be fully exempt from tax.
“This is the first-year dividend tax applies,” The Stat cited accounts and tax expert Datin Christine Koh saying.
“A 2% tax is imposed on total dividend income exceeding RM100,000 in a year, regardless of how many companies it comes from. Many taxpayers may overlook this because dividends were previously tax-free,” she said.
While higher-income investors may face additional liabilities, several relief categories have been broadened, with families expected to benefit most.
Among the notable changes is the RM8,000 medical expenses relief for parents, which has now been extended to include grandparents.
The sports-related lifestyle relief of up to RM1,000 has also been widened to cover expenses incurred for parents, rather than being limited to the taxpayer, spouse or children.
Relief limits for persons with disabilities have likewise been increased.
The deduction for a disabled individual rises from RM6,000 to RM7,000, for a disabled spouse from RM5,000 to RM6,000, and for a disabled child from RM6,000 to RM8,000 per child.
Education and medical insurance relief has been raised to RM4,000.
Meanwhile, the environmental sustainability relief of up to RM2,500 has been expanded to include food waste composting machines, although claims for such equipment may only be made once between the 2025 and 2027 assessment years.
Despite the broader scope, Koh warned that many taxpayers continue to forgo legitimate savings due to misconceptions.
“Common errors include assuming both parents can claim childcare relief, when only one is allowed, or thinking sports equipment purchased for parents is not claimable.
“Dental examination and treatment expenses of up to RM1,000, claimable since 2024, are still widely overlooked,” she said.
Skill enhancement courses are another frequently under-claimed category.
“Courses ranging from recognised professional qualifications to language, creative skills and even online wellness programmes, can be claimed under education or lifestyle reliefs, depending on their nature,” she said.
Nevertheless, Koh cautioned that tax reliefs provide only partial mitigation against rising living costs, as they reduce tax payable rather than actual expenditure.
“At a 20% tax rate, spending RM1,000 only saves RM200 in tax. The remaining RM800 is still a real cash outflow.
“The RM9,000 personal relief works out to about RM25 a day – far from enough to cover basic necessities,” she said.
First-time homebuyers, however, may benefit from a newly introduced housing loan interest relief.
Tax expert Datuk Koong Lin Loong said the incentive applies to loan agreements signed between Jan 1, 2025 and Dec 31, 2027.
“If the property price is RM500,000 or below, taxpayers can claim up to RM7,000 a year while for homes priced above RM500,000 and up to RM750,000, they can claim up to RM5,000 a year for three consecutive years.
“For example, if a loan is signed at the end of 2027, the tax relief can carry on to 2029,” he said. - February 14, 2026
