Tax breaks for M40, higher levy for millionaires

 

BUDGET 2027 | Putrajaya has proposed raising the individual tax relief ceiling from RM9,000 to RM12,000 and cutting income tax rates for selected income brackets, measures expected to boost disposable income by up to RM1,600 for about five million taxpayers.

In tabling the Budget 2027 in the Dewan Rakyat today, Prime Minister Anwar Ibrahim said the measures are aimed at easing the cost-of-living pressures faced by the middle-income group, or M40.

"The government listens to the concerns of the middle-income group, or M40, who have patiently endured the rising cost of living.

"Firstly, the individual tax relief limit, which has remained unchanged since 2010, will be increased from RM9,000 to RM12,000.

"Secondly, individual income tax rates for resident taxpayers will be reduced by one percentage point," he said.

Under the proposal, the tax rate for taxable income between RM70,000 and RM100,000 a year will be reduced to 18 percent, while the rate for taxable income between RM100,000 and RM150,000 will be lowered to 24 percent.

Currently, the tax rate for those earning RM70,001 and RM100,000 a year is at 19 percent - while those earning between RM100,001 and RM400,000 is at 25 percent rate.

However, while selected middle-income earners stand to benefit from the tax cuts, the budget also proposes a higher tax rate for top earners.

"The tax rate for high-income earners with income exceeding RM1 million will be adjusted to 30 percent," Anwar said.

A check of the Inland Revenue Board’s website shows that the 30 percent rate currently applies to annual taxable income exceeding RM2 million.

Wider tax reliefs

Anwar also announced plans to expand individual tax reliefs to cover a wider range of medical expenses, caregiving costs, sports equipment, education and skills training, and lifestyle spending.

Medical expense relief will be expanded to include postnatal care services - while relief for caring for parents and grandparents will cover all caregiving expenses, rather than being limited to healthcare costs.

The proposed changes will also allow claims for sports shoes under sports equipment relief. Education and skills training relief will be expanded to cover all fields of study, as well as tuition fees for children.

Lifestyle relief, meanwhile, will be expanded to include artificial intelligence subscriptions, vaccination costs and fees for adopting pets from registered centres.

"Many people love cats, while some enjoy butterflies and others are fond of snakes. All these interests are covered under our proposal," Anwar said. - Mkini