Budget 2027 Malaysia: What the new measures mean for your money

Malaysia’s Budget 2027 was tabled on 9 October 2026 with a total spending of RM112.5 billion. The budget introduces changes to personal income tax rates, cash assistance programmes, the national minimum wage, EPF contributions, housing stamp duty, and several other measures that affect how much you pay in tax and how much you take home. 

This article breaks down each measure, who is affected, and how the changes work in practice. 

Personal tax relief increased to RM12,000 

The individual tax relief limit has been raised from RM9,000 to RM12,000. This is the first time the ceiling has been adjusted since 2010, and it affects roughly 5.16 million taxpayers. 

Here is a quick comparison of what changed.

Eight items are now eligible for tax relief that were not before: postnatal medical care, general eldercare (like hiring a caregiver for your parents), sports shoes, AI software subscriptions, children’s tuition across all disciplines, pet vaccinations, pet sterilisation, and pet adoption fees. Here is a sample calculation showing how the expanded reliefs affect someone earning RM85,000 a year. 

If you are in the sandwich generation, supporting both children and ageing parents, these expanded categories are the ones most likely to reduce your tax bill. 

Lower tax rates for middle-income earners

Budget 2027 cuts the income tax rate for two brackets by one percentage point each. The RM70,001 to RM100,000 band drops from 19% to 18%. The RM100,001 to RM150,000 band drops from 25% to 24%. The government estimates this will put up to RM1,600 in additional disposable income into the pockets of about five million taxpayers. 

Here is how the rate change works. Someone with a chargeable income of RM95,000 falls partly in the RM70,001 to RM100,000 band. Under the old rate of 19%, the tax on the RM24,999 in that band would be RM4,750. Under the new rate of 18%, it drops to RM4,500. That is RM250 saved on this band alone, before factoring in the higher relief ceiling.

The tax rate on income above RM1 million goes up to 30%, and the threshold for the top bracket has been lowered from RM2 million to RM1 million. For someone earning RM1.5 million, the RM500,000 above RM1 million was previously taxed at around 26% to 28%. Under Budget 2027, all of it falls into the 30% bracket. 

STR and SARA: bigger allocation, more recipients 

The combined allocation for Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) has increased to RM16 billion for Budget 2027, up from RM15 billion. The programme now covers around 13 million citizens, including the M40 group. 

Here is how the payments break down. STR recipients get SARA assistance of up to RM150 per month, which works out to RM1,800 a year. That money can be spent at small grocery partner shops, which are expanding to 10,000 outlets, and SARA credits can now also be used for fresh produce at 216 FAMA farmers’ and pasar pagi. 

Malaysians aged 18 and above who are not STR recipients get SARA Madani assistance of RM100 on two occasions: before Hari Raya Aidilfitri and before Merdeka. It’s automatic and requires no application. 

Minimum wage increased to RM2,000 from RM1,700 

The national minimum wage sees a raise of RM300 from RM1,700 to RM2,000, effective June 2027.  Micro, small and medium enterprises (MSMEs) with annual sales below RM50 million are exempt from the increase. 

There is also a new minimum wage of RM2,500 for semi-skilled workers and fresh graduates, which is a separate framework aimed at entry-level professional roles. Government-linked companies and investment firms will benchmark their living wage to RM3,400 per month.  

EPF changes: auto-enrolment and gig worker support 

 Every Malaysian citizen will now be automatically registered as an EPF member when they turn 18. Previously, registration only happened when you started your first job. 

Budget 2027 also introduces two separate matching schemes for gig workers and self-employed individuals, each run by a different agency. 

The first is a government matching incentive for EPF voluntary contributions. When a gig worker (such as an e-hailing driver or food delivery rider) contributes to their EPF voluntarily, the government matches a portion of that contribution, up to RM600 per year. This matching incentive has a lifetime cap of RM6,000, which means once you have received RM6,000 in total government matches, the scheme ends. At RM600 per year, it takes 10 years of consistent contributions to reach the cap. 

The second is a PERKESO (SOCSO) matching scheme. PERKESO matches a percentage of your social security contributions. E-hailing and delivery riders get a 35% match, which increases to 50% if the platform (such as Grab or Foodpanda) also covers the worker’s portion. For around 200,000 self-employed individuals in other sectors, the PERKESO match goes up to 70%. This is separate from the EPF matching above and covers your social security protection, not your retirement savings. 

For the average Malaysian, this means that if you earn income outside of a traditional employment arrangement, contributing to both EPF and PERKESO voluntarily now comes with government money on top. 

EPF members aged 55 and 60 can now choose the i-Emas withdrawal option, which allows monthly withdrawals instead of taking the full balance as a lump sum. Muslim members using Simpanan Shariah (EPF’s Shariah-compliant savings account) can now pay zakat directly from their dividends. 

The tax relief for SOCSO contributions has also been expanded to cover LINDUNG Kendiri mandatory payments. LINDUNG Kendiri is PERKESO’s social security scheme for self-employed people, covering employment injury and invalidity. If you are a freelancer or run your own business and you are paying into it, those contributions now count towards your tax relief. There is also an additional RM150 relief for voluntary LINDUNG schemes. 

Housing and stamp duty relief for first-time buyers 

Budget 2027 offers full stamp duty exemption on loan agreements and instruments of transfer for first homes priced up to RM500,000. For properties priced between RM500,001 and RM750,000, the exemption covers the first RM500,000 in full and 50% on the balance. 

This applies from 1 January 2027 to 31 December 2030. A Malaysian buying their first condo at RM450,000 would normally pay around RM10,000 to RM13,000 in stamp duty across the transfer and loan agreement. Under this exemption, that amount is waived. Abandoned housing projects that are being revived also get full stamp duty waivers during the same period. And stamp duty on savings and current account openings is fully exempted from 1 January 2027. 

PTPTN: Employer deductions and borrower discounts 

Employers who repay PTPTN loans on behalf of their staff can now claim tax deductions from January 2027 to December 2028. Consistent PTPTN borrowers get a 10% discount on their outstanding balance. 

For borrowers earning below RM2,500 per month, loan deferment applies. Those earning between RM2,500 and RM3,000 have a minimum monthly repayment of RM50.  

New investment avenues and savings incentives in Budget 2027

The government is introducing a tokenised retail savings sukuk. A sukuk is an Islamic financial instrument similar to a bond, where investors receive returns from underlying assets rather than interest. The “tokenised” part means it will be issued on a blockchain, allowing smaller denominations so that ordinary Malaysians can invest with a low entry point. Funds raised will be directed to education, health and social protection programmes. Details on how to participate and the expected returns have not been released yet. 

Budget 2027 also extends tax exemptions through 2030 for two types of startup investment. The first is equity crowdfunding (ECF), which is a platform where individuals can buy shares in unlisted companies, similar to how you might buy stocks on Bursa Malaysia but for early-stage startups instead. The second is angel investing, where individuals put their own money directly into early-stage tech startups in exchange for equity. If you are not currently investing in startups, these exemptions are unlikely to affect you directly, but they signal the government’s continued push to grow Malaysia’s startup ecosystem. 

In the meantime, if you are looking for accessible investment options already available in TNG eWallet, the SAVE feature gives you projected returns of 3.30% per annum through the Principal Islamic Money Market Fund, with no lock-in period and a minimum start of RM10. It is a useful alternative for money you want to keep accessible but still working for you.  

Other Budget 2027 measures that affect your personal finances  

The big-ticket items get the headlines, but Budget 2027 has several smaller measures that could affect your daily life depending on your situation. 

If you have ageing parents, the service tax on elderly care services drops from 8% to 6% in January 2027. Facilities charging below RM96,000 a year are fully exempt from service tax altogether. That could mean a few hundred ringgit less per month on a care home bill. 

For those struggling with debt, the bankruptcy threshold goes up from RM100,000 to RM150,000. It does not erase what you owe, but it gives you more room before legal proceedings can begin. 

Families with school-going children will see early schooling aid (known as BAP, or Bantuan Awal Persekolahan) increase from RM150 to RM200 per pupil. Form Six students get a RM2,500 living allowance. And FLYSISWA, the government’s flight subsidy for students from Sabah and Sarawak studying in Peninsular Malaysia, goes up to RM500. 

If you are a civil servant at Premier Grade Utama B or below, including contract staff, you get RM1,500 in two payments before Aidilfitri and Merdeka. Pensioners and non-pensioned military veterans get RM750. Taxi, rental car and school bus drivers get a one-time RM1,000 payment. 

Disability assistance totals RM1.5 billion, with special education student allowances rising to RM200 and the disabled worker allowance income ceiling increasing to RM2,000. 

And for everyday costs, fuel subsidies continue under BUDI95 and BUDI Diesel (the government’s targeted fuel subsidy programmes) with quotas of 300 and 400 litres respectively. The electricity subsidy threshold stays at 800 kWh per month.  

What to check before the changes take effect  

Budget 2027 measures roll out on different timelines. The tax rate cuts apply from January 2027, the minimum wage increase takes effect in June, and the housing stamp duty exemption is valid from January 2027 through December 2030.

For taxpayers in the RM70,000 to RM150,000 income range, the lower tax rates will be reflected in monthly PCB (potongan cukai berjadual) deductions from January 2027 onwards. The expanded relief categories — athletic footwear, general eldercare expenses, AI software subscriptions, tuition across all subjects, and pet care costs — apply to the 2027 year of assessment.

Gig workers and self-employed individuals can start making voluntary EPF contributions to access the government matching incentive of up to RM600 per year, subject to the RM6,000 lifetime cap.

First-time homebuyers are eligible for full stamp duty exemption on properties priced up to RM500,000 from January 2027. On a RM450,000 property, stamp duty on the transfer and loan agreement typically comes to around RM10,000 to RM13,000.

The SAVE feature in TNG eWallet offers a projected return of 3.30% per annum through the Principal Islamic Money Market Fund, with no lock-in period and a minimum of RM10. Details on the tokenised retail savings sukuk will be announced by the government at a later date.

FAQs

Who benefits most from Budget 2027 tax relief? 

Middle-income earners with chargeable income between RM70,000 and RM150,000 benefit the most. Their tax rates drop by one percentage point, and the individual relief limit rises to RM12,000 from RM9,000. The government estimates up to RM1,600 in additional disposable income for about five million taxpayers. 

How much is STR and SARA in 2027? 

STR recipients get SARA assistance of up to RM150 per month (RM1,800 annually). Malaysians aged 18 and above who are not STR recipients get RM100 twice a year, disbursed before Hari Raya Aidilfitri and National Day. The combined STR and SARA allocation is RM16 billion. 

When does the new minimum wage take effect? 

The minimum wage increases from RM1,700 to RM2,000 in June 2027. MSMEs with annual sales below RM50 million are exempt. A separate minimum wage of RM2,500 applies to semi-skilled workers and fresh graduates. 

What changed for EPF in Budget 2027? 

All Malaysian citizens are now automatically registered as EPF members at age 18. Gig workers get a matching incentive of up to RM600 per year for voluntary contributions, with a lifetime cap of RM6,000. Members aged 55 and 60 can choose the i-Emas monthly withdrawal option. 

Is there stamp duty exemption for first homes in 2027? 

Yes. First-time homebuyers get full stamp duty exemption on loan agreements and instruments of transfer for properties priced up to RM500,000, valid from January 2027 to December 2030. Properties priced between RM500,001 and RM750,000 get full exemption on the first RM500,000 and 50% on the balance.