Tax Deductions

The following compulsory and optional tax deductions in the year 2023 are deducted from your annual taxable income to arrive at your annual chargeable income, based on which the amount of tax payable will be calculated. Employees can claim optional deductions by submitting form TP1 to their employer. The employer can then enter the tax deduction amount in the payroll in order to lower the employee’s PCB. In PayrollPanda, all the optional tax deductions are preset under the Deductions category.

Compulsory Deductions

Deduction Amount limited to (RM)
Deduction for an individual in respect of himself and his dependent relatives is granted automatically.
Deduction in respect of a spouse living together in the basis year on condition that the spouse has no source of income/total income or has elected for joint assessment.
See here for more details on additional deductions in relation to children.
Contribution to EPF 
Deduction for EPF employee contributions.
Disabled Person
Additional deduction for disabled individuals.
Disabled Spouse
Additional deduction for an individual living with a disabled spouse with no income.

Optional Tax Deductions

Deduction Amount limited to (RM)
Medical Treatment, Special Needs or Carer Expenses of Parents
Medical treatment, special needs and carer expenses for parents. Medical expenses which qualify for deductions include:

  • medical care and treatment provided by a nursing home; and
  • dental treatment limited to tooth extraction, filling, scaling and cleaning but not including cosmetic dental treatment.

The claim must be supported by a certified medical practitioner registered with the Malaysian Medical Council that the medical conditions of the parents require medical treatment or special needs or carer.
The parents shall be resident in Malaysia. The medical treatment and care services are provided in Malaysia.
In the case of a carer, it shall be proven by a written certification, receipt or copy of carer’s work permit. “Carer” shall not include that individual’s husband, wife or child.

Basic Supporting Equipment
The purchase of any supporting equipment for one’s own use, if he/she is a disabled person or for the use of his/her spouse, child or parent, who is a disabled person. Basic supporting equipment includes haemodialysis machine, wheelchair, artificial leg and hearing aid but excludes optical lenses and spectacles.
Higher Education Fees (Self)
Deduction for higher education fees for any course of study in an institution or professional body in Malaysia recognized by the Government of Malaysia or approved by the Minister of Finance for the purpose of enhancing any skill or qualification:

  • up to tertiary level (other than Master’s and Doctorate) in law, accounting, Islamic finance, technical, vocational, industrial, scientific or technology; or
  • any course of study at Master’s or Doctorate level

Scope of relief includes expenses for any course of study undertaken for the purpose of up-skilling or self-enhancement conducted by a body recognized by the Director General of Skills Development up to RM2,000 per year.

Medical Expenses on Serious Diseases and Fertility Treatment
Medical expenses on serious diseases for self, spouse or child include the treatment of acquired immune deficiency syndrome (AIDS), Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases.
‘Other similar diseases’ such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant or major amputation of limbs.
Medical expenses on fertility treatment for self or spouse.
Scope of relief also includes:

  • complete medical examination expenses (self, spouse and child) up to RM1,000;
  • vaccination expenses (self, spouse and child) up to RM1,000;
  • intervention expenditure for autism, ADHD, Down syndrome and specific learning disabilities (child) up to RM4,000.
Net Deposit in Skim Simpanan Pendidikan Nasional (SSPN)
Amount deposited in SSPN by an individual for his children’s education. The deduction is limited to the net amount deposited in that basis year only (deposits less withdrawals for the year).
Payment of Alimony to Former Wife
Payment of alimony to former wife is deductible provided that the total deduction for wife with no income and alimony payment to former wife is limited to RM4,000 per year. Voluntary alimony payment to a former wife under a mutual agreement but without any formal agreement does not qualify as a deduction.
Life Insurance
Deduction for life insurance premiums and voluntary EPF contributions.
Contribution to a Private Retirement Scheme and Payment of Deferred Annuity
Deduction on contribution to Private Retirement Scheme approved by the Securities Commission under The Capital Markets and Services Act 2007 or payment of deferred annuity premium or both.
Education and Medical Insurance
Deduction for insurance premiums in respect of education or medical benefits for an individual, husband, wife or child.
PERKESO Contributions
Deduction for SOCSO and EIS employee contributions.
Lifestyle Relief
Combined tax deduction for reading materials, computers and sports equipment (Includes purchase of newspapers, smartphones and tablets, internet subscriptions & gymnasium membership fees). 
Sports Relief
Additional tax deduction for sports equipment, facilities rental and competition fees.
Breastfeeding Equipment
Deduction for purchase of breastfeeding equipment, for women taxpayers only.
1,000 (once every 2 years)
Early Education
Deduction for taxpayers who enroll their children aged 6 years and below in registered nurseries and preschools. To be claimed by either parent.
Electric Vehicle (EV) Charging Facility Expenses
Deduction for expenses related to:

  • the cost of installing an EV charger;
  • purchases (including hire purchase) of EV chargers;
  • EV charger rental; or
  • EV charging facility subscription fee.

Tax Rebates

Unlike tax deductions which are reductions in your annual chargeable income, tax rebates are reductions in the amount of tax you pay after you have calculated your tax for the year.

Rebate on Zakat

Zakat can be deducted via payroll, or paid direct by the employee to the zakat authority or eligible charity (with the tax relief then being claimed through form TP1).

Rebates for Individuals with Chargeable Income not exceeding RM35,000

A rebate of RM400 is available to individuals with an annual chargeable income not exceeding RM35,000. Where the spouse does not receive an income or is jointly assessed, a further RM400 rebate can be claimed.

Rebate on Departure Levy for performing Umrah and Pilgrimage to Holy Places

A tax rebate on the amount of departure levy paid when performing Umrah or Pilgrimage to holy places.

The rebate can be claimed twice in a lifetime and is to be claimed with proof of boarding pass and either one of the following:

(a) Umrah visa issued by the embassy of the Kingdom of Saudi Arabia; or

(b) Confirmation letter on pilgrimage to the holy place from a religious body recognized by the Committee for the Promotion of Inter-Religious Understanding and Harmony Among Adherents, Prime Minister’s Department.

The rebate shall not be granted in respect of the departure levy paid for the purpose of performing hajj.


Some frequently asked questions...

Compulsory tax deductions include:

  • Individual:  RM 9,000 annually for all resident individuals.
  • Spouse: RM 4,000 if the spouse does not have any source of income or has opted for joint assessment.
  • Child: Amount for dependent child under 18: RM 2,000. Additional amounts for child in higher education or disabled child.
  • EPF Deduction: Deduction for mandatory and voluntary employee contributions to EPF limited to RM 4,000 annually.
  • Disability: RM6,000 additional deduction for disabled individuals.
  • Disabled Spouse: RM5,000 additional deduction if unemployed spouse is disabled.

The annual tax deduction limit is RM 8,000, including up to RM1,000 for complete medical examination.

Yes, female employees benefit from a tax deduction of up to RM1,000 claimable every 2 years for the purchase of breastfeeding equipment. 

Individuals with an annual chargeable income not exceeding RM35,000 can avail a rebate of RM400. If the spouse does not receive an income or is jointly assessed, an additional RM400 rebate can be claimed.

The rebate on the departure levy for performing Umrah  or pilgrimage to holy places can be claimed twice in a lifetime.

The maximum annual deduction limit for contributions to a private retirement scheme (PRS) and payments of deferred annuity is RM3,000.

Yes, an employer can claim tax deductions for SOCSO and EIS employee contributions up to an annual limit of RM350.

Tax deduction of up to RM7,000 for Higher Education fees for an individual for tertiary education in specified fields or qualifications, and including up to RM2,000 tax deduction for upskilling or self-enhancement courses.  

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