Malaysia’s 2026 Budget, tabled on 10 October 2025, further advances the nation’s push toward a digital, inclusive and sustainable economy. The measures focus on encouraging investments, strengthening fiscal resilience, and supporting innovation — all while enhancing tax transparency through e-Invoicing and tighter compliance obligations.
Whether you’re a company, a foreign investor or a resident individual taxpayer, here’s a clear breakdown of what’s changing — and what it means for you.
The exemption scope for foreign-sourced income received in Malaysia is expanded to cover more categories of active income.
This makes cross-border structures more flexible while keeping anti-avoidance safeguards intact.
The automation, digitalisation, and green-investment ACA continues — rewarding businesses investing in process upgrades or low-carbon technology.
AI Training & Digital Skills: deductions for approved programmes.
Food Security & Agri-Automation: incentives for smart-farming and local food resilience.
Tourism & MICE: deductions for international events and cultural promotion.
Venture Capital & Scholarships: broader eligibility for VC funds and employer-sponsored education.
Inclusive Hiring: double deductions remain for hiring senior citizens, single parents, OKU, and ex-convicts.
The deduction for listing expenses on Bursa Malaysia is extended to encourage more IPOs.
From YA 2026, profits distributed to LLP partners will be taxable under new provisions (details to be clarified in the Finance Bill).
The IRBM e-Invoicing schedule continues its phased implementation — with full adoption expected across all taxpayers in 2027.
Companies should begin ERP integration and workflow testing now.
Self and dependent relatives – RM 9,000
Disabled individual – RM 7,000
Spouse with no income – RM 4,000
Disabled spouse – RM 6,000
Child under 18 or student 18+ – RM 2,000
Child over 18 in higher education – RM 8,000
Disabled child – RM 8,000 (plus RM 8,000 if pursuing higher education)
Education fees for self – RM 7,000
Life insurance / family takaful / EPF – RM 3,000
Voluntary PRS and deferred annuity – RM 3,000 (extended to YA 2030)
Education or medical insurance – RM 4,000
Lifestyle spending (books, computer, internet, training) – RM 2,500
Sports equipment or membership – RM 1,000
Medical treatment for parents and full medical exam – RM 8,000
Medical expenses for self/spouse/child – RM 10,000 (including vaccines up to RM 1,000, dental up to RM 1,000, learning-disability support up to RM 6,000)
Purchase of support equipment for disabled self/spouse/child/parent – RM 6,000
Property ≤ RM 500,000 – relief up to RM 7,000 per year
Property RM 500,001 to RM 750,000 – relief up to RM 5,000 per year
(Applies to purchases from 1 Jan 2025 to 31 Dec 2027)
Tourist attraction and cultural programmes – up to RM 1,000 (YA 2026 only)
EV charging equipment, food-waste composting machine or home CCTV – up to RM 2,500 (YA 2026 onwards)
Childcare or kindergarten fees (up to age 12, registered centres) – RM 3,000
Excise duties on alcohol (+10%) and tobacco products rise effective 1 Nov 2025.
Nicotine replacement therapy remains tax-exempt to encourage smoking cessation.
Import and SST exemptions continue for EVs, taxis and e-hailing vehicles.
Stamp duty increased for non-citizen property buyers; exemptions maintained for first-home buyers and low-premium insurance.
Reassess FSIE eligibility and documentation.
Leverage AI, automation and inclusive-hiring deductions.
Update payroll and HR systems for new personal reliefs.
Prepare for e-Invoicing adoption.
Review property transactions and stamp duty exposure.
Keep receipts and certificates for all new reliefs (vaccinations, EV equipment, learning support).
Malaysia’s 2026 Budget rewards digital innovation and sustainability while tightening tax governance. Both businesses and individuals gain new opportunities — provided they stay proactive and document compliance carefully.
If you want to see how these changes affect your organisation or employees, Ask Genie can help — with real-time country-specific HR and tax insights for Asia-Pacific countries. Learn More About AskGenie
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