Kuala Lumpur:The increase in the individual tax relief limit to RM12,000 and the reduction of income tax rates announced in Malaysia’s Budget 2027 are anticipated to stimulate domestic spending and support economic growth, according to economists.
According to BERNAMA News Agency, Associate Professor Dr. Mustazar Mansur from Universiti Kebangsaan Malaysia emphasized that the tax cuts would allow households to spend more on essentials like housing, education, healthcare, and food. The middle-income group, known as M40, stands to benefit significantly from the expanded tax relief, which now includes expenses such as parental care, tuition fees, and sports shoes.
Prime Minister Datuk Seri Anwar Ibrahim announced during the Budget 2027 presentation at the Dewan Rakyat that individual tax relief limits would be increased from RM9,000 to RM12,000. Additionally, tax rates for income between RM70,000 and RM100,000 will be reduced to 18 percent, and for income between RM100,000 and RM150,000 to 24 percent. The government has also broadened tax relief to cover postnatal care, children's tuition, AI subscriptions, and costs for vaccinating and adopting pets from registered centers.
Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, stated that the increase in tax relief was timely, considering the rising cost of living. He noted that this measure could alleviate financial pressures on middle-income households, especially in areas like housing, education, and family care.
Dr. Saravanan Thambirajah, CEO of the Federation of Malaysian Consumers Associations, welcomed the tax relief and rate reductions, acknowledging their potential to lessen tax liabilities and boost disposable income for eligible taxpayers. However, he urged the government to continue enhancing public services like healthcare and transport to address significant financial commitments faced by M40 families.
Muhamad Ilham Nordin, an officer at the Ministry of Transport in Putrajaya, highlighted the relevance of the expanded tax relief for AI subscriptions and sports shoes to current needs, particularly for those in the M40 group. He suggested that the government consider additional measures such as vehicle maintenance rebates to further assist households reliant on private vehicles.