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Minimum Salary to Pay Income Tax

In Malaysia, if you reside for a minimum of 182 days, you will become a tax resident and benefit from lower tax rates and tax deductions.

The question of “what is the minimum salary to pay income tax?” is often asked, particularly for those earning a monthly salary between RM3,500 to RM4,000.

To address this question, this video by Mr. Low Chin Ann offers helpful insights on the minimum income required to pay income tax in Malaysia.

With Malaysia offering tax rebates for residents with a chargeable income of less than RM35,000, it’s important to carefully plan your finances to take advantage of tax reliefs. We hope this video proves useful.

Quick Computation : Based on YA 2023’s Tax Rates

We know that there is a tax rebate of RM400 if your chargeable income is not exceeding RM35,000.
So Let’s start with that in mind “If My Tax Payable is RM400 less Rebate RM400” you will have no tax to pay.
So how much is your chargeable income, if you want your Income Tax payable to be RM400?
First RM20,000 your tax is RM150. That leaves RM250 / 0.03 = About RM8,330.00
So You will have RM0 tax to pay when your chargeable income is RM28,330.00
How much should your income be if you want your chargeable income to be RM24,160? Remember, this is chargeable income, and you have tax reliefs.Basically, the typical reliefs you will surely get as an employee would be
1. Personal relief RM9,000
2. EPF RM4,000 (you should be able to get max)
3. Socso – I just estimate at RM200 here.
Working backwords – if you have NO OTHER DEDUCTIONS (eg. no other relief, no donations), your income will have no tax if:RM 28,330 + 13,200 = RM41,530.00.
It will be on average about RM3,460.00
If your monthly salary is RM3,400 – you will sure have no income tax to pay as a Resident Individual.
You MAY not need to pay tax, even if your income is higher than RM3,400 because you could be qualified for additional relief.Eg:
1. Spouse relief if your spouse is not having income.
2. You have lifestyle relief like broadband subscription, buy handphone, gym membership, etc.
3. You pay for life and/or medical insurance.
4. You have children (child relief)
5. Many more.

Other Topics that you might be interested with:

  1. INCOME TAX RATES
  2. NEED HELP IN YOUR ACCOUNTING & TAX COMPUTATION?
  3. BUDGET 2023 PROPOSALS EXPLAINED : PERSONAL TAX
  4. MINIMUM INCOME REQUIRED FOR MY MONTHLY EXPENSES

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