Calculate Your Taxable (Or Chargeable) Income In Malaysia
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Here’s our step-by-step guide to help you find your chargeable income for Malaysia income tax 2025 season.
First of all, you need to know what is considered income by Lembaga Hasil Dalam Negeri (LHDN). Is it just the monthly salary you get from your employer, or does it also include other types of income.
With effect from the year 2015, an individual who earns an annual employment income of RM34,000 (after EPF deduction) has to register a tax file.
In other words, those who earn a minimum salary of about RM3,000 a month should file their income tax.
Taxable (or chargeable) income in Malaysia
These are the types of income that are taxable:
- Business or profession
- Employment
- Dividends
- Interests (except bank deposit interests)
- Discounts
- Rent collected
- Royalties
- Premiums
- Pensions
- Annuities
- Prequisites, which includes bill claims, company credit cards, loans from company, sponsored club memberships, sponsored child tuition fee, personal driver and any benefits offered by your employer that could be converted into cash.
All you need to do now is to add all your taxable incomes to find your total income.
Guide to calculate your actual chargeable income (income subject to taxation)
Before you can get the amount of your income that is chargeable or taxable, you have to calculate your total income first.
Calculate your total income
Here’s an example of how to derive your total income:
Now that you have your total annual income, you need to find out what your chargeable income is.
Find your actual chargeable income (taxable income)
Chargeable income, also known as taxable income, is your total annual income minus all the tax exemptions and tax reliefs you are entitled to.
Here’s an example of how to calculate your chargeable income:
And that’s how you find your chargeable income.
How much of your personal income is taxable?
But why do you need to find your chargeable income? Because income tax in Malaysia works in a way where the amount of tax you have to pay depends on your chargeable income not, your total income. So calculating your chargeable income correctly is important to ensure that you’re paying the right amount in taxes for the Malaysia income tax 2025 season.
But now, one thing that you have to know is that all this information still doesn’t take into account your foreign income. So is foreign income taxable in Malaysia? Well the simple answer to that is yes, if it hasn’t been taxed in the country of its origin. But the long answer to that question is, it depends on what type of foreign income you make.
The government has been updating their policy on the taxability of foreign income, so you might want to check if your foreign income is taxable.
