This article first appeared in The Edge Malaysia Weekly on October 12, 2026 - October 18, 2026
TAX INCENTIVES FOR INDIVIDUALS
• The individual tax relief threshold has been raised to RM12,000 from RM9,000
• Individual income tax rates have been reduced by 1% for two chargeable income bands: RM70,000 to RM100,000, with the rate reduced to 18%, and RM100,000 to RM150,000, with the rate reduced to 24%
• The income tax rate for individuals earning more than RM1 million is set at 30%
• Tax relief has been expanded to cover postpartum care, parental care, sports shoes, AI software subscriptions and pet-related expenses
• Stamp duty exemptions have been introduced for the opening of savings and current accounts effective Jan 1, 2027
• Socso-related tax relief has been expanded to cover mandatory contributions to the Lindung Kendiri scheme, with additional relief of up to RM150 for voluntary contributions to Lindung 24 Jam and Lindung Kendiri
• Lifestyle tax relief has been expanded to explicitly include pet vaccination expenses and adoption fees paid to registered shelters
• The service tax rate on elderly care services has been reduced from 8% to 6% effective Jan 1, 2027
TAX INCENTIVES FOR BUSINESSES
• Tax rates for micro, small and medium enterprises (MSMEs) have been reduced to 14% on the first RM150,000 of taxable income and 16% on the next RM450,000
• Malaysia will enhance its Global Services Hub tax incentives effective from Jan 1, 2027, offering a concessionary tax rate of 5%, extensions of up to 30 years, and withholding tax and stamp duty exemptions for treasury operations, including those under the Johor-Singapore Special Economic Zone (JS-SEZ) package
• Shariah-compliant fund management service providers will receive a 40% tax exemption for the assessment years 2028 to 2030
• Prisma Sukuk issuers will be eligible for tax deductions on issuance costs approved by the Securities Commission Malaysia for the assessment years 2027 to 2030
• Tax deductions for private companies participating in Bakat Madani will be available from June 29, 2026 to Dec 31, 2030
• Donors contributing food supplies and cooking equipment to the Dapur Siswa Madani initiative will be eligible for tax deductions from Jan 1, 2027, to Dec 31, 2030
• To curb the employment of undocumented foreign workers, non-MSMEs may claim tax deductions for wage expenses only if wages are paid through compliant bank accounts permitted under the Employment Act 1955
TAX INCENTIVES FOR PARENTS AND FAMILY CAREGIVERS
• Individual tax relief has been expanded to cover all care-related expenses for parents and grandparents
• Tax relief for medical expenses has been expanded to include postpartum care, while skills development fee relief is extended to cover children’s tuition fees
• Early schooling assistance has been increased to RM200 per pupil from RM150 per pupil
• Civil servants’ maternity leave has been extended to a maximum of 98 days per birth
WAGES AND WORKERS
• The minimum wage will increase from RM1,700 to RM2,000 from June 2027, covering eight million workers. SMEs with annual sales below RM50 million are exempt.
• A new minimum wage of RM2,500 has been introduced for semi-skilled workers and graduates
• A RM160 million package will be introduced for gig workers in collaboration with Grab, with Socso contributions matched at rates of 35% to 50%
• EPF registration will become automatic upon reaching the age of 18
• Civil servants will receive RM1,500 in financial assistance, while more than one million retirees will receive RM750 each
• The minimum pension will increase to RM1,350
• More than RM40 million will be channelled through HRD Corp to train 8,000 workers in elderly care
COST OF LIVING AND WELFARE
• RM16 billion has been allocated for Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara). Monthly Sara assistance of RM150 will be provided to all STR recipients.
• Under Sara Madani, non-STR adults will receive RM100 on two occasions
• RM750 million has been allocated for Jualan Rahmah and Agro initiatives
• RM1.3 billion has been allocated for senior citizen assistance, while RM1.5 billion has been allocated for assistance to persons with disabilities
• The bankruptcy threshold has been raised to RM150,000 from RM100,000
PROPERTY AND HOUSING
• First-time homebuyers will enjoy full stamp duty exemptions on homes priced up to RM500,000. For homes priced up to RM750,000, the first RM500,000 will be exempted, while the remaining amount will qualify for a 50% exemption. These exemptions apply to sale and purchase agreements signed from Jan 1, 2027, to Dec 31, 2030
• Housing Credit Guarantee Scheme (SJKP) guarantees of up to RM20 billion will support about 80,000 first-time homebuyers
• About RM1 billion has been allocated for Rumah Mesra Rakyat and Residensi Rakyat programmes
• Stamp duty exemptions will be provided to developers and original buyers involved in the rescue of abandoned housing projects
• Registration for Phase 1 of Bandar Madani Bukit Jalil opens on Oct 12
• At least 2,500 Rumah Madani units have been planned for Belfield, Kuala Lumpur, with 70% earmarked for bumiputera buyers
TOURISM AND HOSPITALITY
• Visit Malaysia Year initiatives will be extended into 2027, with RM935 million allocated for tourism and culture
• The duty-free shopping limit in Langkawi and Labuan will increase to RM10,000 for visitors staying at least 48 hours
• The flight-matching grant will be expanded to cover cruise ships, ferries and tour buses
• Rebates will be offered for events held at venues with a capacity of 10,000 or more. Incentives for incentive travel, conferences and exhibitions have been extended to 2030.
• RM1.1 billion has been allocated for port roads and airports, including those in Penang, Kota Kinabalu and Miri
• RM240 million has been allocated for the 2027 SEA Games and Asean Para Games
• Entertainment duty exemptions will be provided for arts, cultural, entertainment and sporting events held at Stadium Negara and Stadium Merdeka
• Full entertainment duty exemptions will apply to tickets for local films and theatrical performances in Kuala Lumpur, Putrajaya and Labuan
HEALTHCARE
• RM47.7 billion has been allocated to the Ministry of Health
• Permanent positions will be created for more than 9,000 doctors
• The monthly allowance for 47,000 nurses and paramedics will increase to RM200 from RM100
• Medi Asas will be launched in January 2027, with a first-year premium subsidy of RM200 per employee for SMEs
• RM1 billion has been allocated for electronic medical records, alongside funding for 400 ambulances and RM1.2 billion for healthcare facility maintenance
• Private hospitals will be required to use standardised billing categories from 2027 to address price discrepancies
EDUCATION AND YOUTH
• RM69 billion has been allocated to the Ministry of Education. Funding for school repairs will double to RM2 billion.
• Form Six students will receive a living allowance of RM2,500
• RM19.1 billion has been allocated to the Ministry of Higher Education
• PTPTN loan repayments will be deferred for borrowers earning up to RM2,500, while regular payers will receive a 10% discount
• RM8 billion has been allocated for technical and vocational education and training (TVET). Bakat Madani aims to create 30,000 jobs.
• RM1.3 billion has been allocated to upgrade 682 dilapidated schools
• Public Service Department (JPA) sponsorships for students from Sabah and Sarawak will double to 4,200
• KWAP will invest RM750 million in student housing at six universities under the Vista Kampus initiative
TRANSPORT AND INFRASTRUCTURE
• Phase 1 of the East Coast Rail Link is scheduled to begin operations in December
• RM3.4 billion has been allocated for Prasarana’s rail network overhaul, including the acquisition of 42 new train sets
• RM2.3 billion has been allocated for rural roads, RM2.5 billion for federal roads and RM5.7 billion for state roads under the Malaysian Road Records Information System (MARRIS)
• RM5 billion has been allocated for the JENDELA initiative, while RM2.5 billion has been allocated for water pipe replacement
• Johor Bahru will introduce an electric autonomous rapid transit (e-ART) system to ease traffic congestion
ENERGY AND ENVIRONMENT
• RM15 billion will be invested in the electricity grid through Tenaga Nasional Bhd, while RM1 billion each will be allocated to UEM Lestra and KWAP Dana Iklim
• Rebates of up to RM200 will be offered for energy-efficient air conditioners and refrigerators
• Disaster-related home repair assistance will increase to RM10,000 from RM5,000. A total of 82 flood mitigation projects are under way.
• Investment tax allowances of up to 100% will be available for green technology and electric vehicle charging investments until 2030
• Malaysia will channel RM15 million from palm oil cess collections into environmental conservation, prioritising habitat protection for the Malayan tiger, Bornean elephant and orangutan
AGRICULTURE
• RM2.62 billion has been allocated for paddy assistance, equivalent to RM4,300 per hectare
• The harvesting incentive will increase from RM50 to RM100 per hectare
• The rubber incentive will rise from RM3 to RM3.30 per kg
• RM100 million in hybrid financing will be provided to support oil palm replanting among smallholders
• RM1.26 billion has been allocated to Felda
BUSINESS, TECHNOLOGY AND INVESTMENT
• RM25 billion in domestic investment will be channelled through government-linked investment companies (GLICs) under the Government-Linked Enterprises Activation and Reform Programme (GEAR-uP)
• Financing and guarantee facilities will increase from RM50 billion to RM57 billion. Bank Negara Malaysia will contribute an additional RM5 billion to its SME financing facility.
• RM6.6 billion has been allocated for microfinancing. Interest rates on basic credit cards will be capped at 14%.
• Khazanah and KWAP will allocate RM1.2 billion for the semiconductor industry. Penang will receive RM100 million for a Strategic Investment Fund.
• The government will provide 100,000 additional free AI subscriptions, establish a Sovereign AI Cloud and allocate RM6 billion for research and development
• The E-Commerce Bill will be tabled at the next parliamentary sitting
BUMIPUTERA AND iSLAMIC ECONOMY
• Bumiputera procurement allocations for G1 to G4 contractors will increase from RM4 billion to RM7.5 billion
• A 50-acre land endowment valued at RM1 billion will be provided to Yayasan Pelaburan Bumiputra
• Funding for Islamic affairs will increase to RM3.1 billion from RM2.6 billion
• GLICs will invest RM2 billion to strengthen bumiputera companies, while Ekuinas and Pelaburan Hartanah will support bumiputera companies seeking to list on the stock exchange
• Khazanah and Teraju will establish the RM250 million Dana Ciptawan to support the growth of mid-sized bumiputera companies
STATES, SECURITIES AND OTHERS
• Federal allocations for Sabah and Sarawak will amount to RM18.7 billion and RM16.2 billion respectively
• Under the Malaysia Agreement 1963 (MA63), the interim special grant for Sabah and Sarawak will increase to RM1.5 billion, with payment to be completed before the end of the year
• RM22 billion each has been allocated to the Ministry of Home Affairs and the Ministry of Defence
• A Government-Owned Entities Bill will be drafted, while the Procurement Act is scheduled to come into force in 2027
• RM1.1 billion has been allocated to enforcement agencies
• RM445 million has been allocated for Orang Asli development, including replanting initiatives and preschool projects
• Funding for infrastructure repairs in Chinese New Villages will increase to more than RM100 million, including allocations to repair and rebuild dilapidated infrastructure
Read also:
Cover Story: Translating reforms into more tangible benefits
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Cover Story: Regulators and industry leaders’ take on the budget
Cover Story: Continuing the journey of fiscal consolidation and prudence
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