New Proposed Tax Rate 2023

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim has proposed some changes to the income tax rates under the new Budget 2023. Designed to increase the disposable income for the M40 group, this proposed amendment will see reduced tax rates of 2% while increasing the upper income levels by 0.5%.

Chargeable income (RM)	Current income tax rate	New income tax rate
35,001 – 50,000	8%	6%
50,001 – 70,000	13%	11%
70,001 – 100,000	21%	19%

This proposal will effectively increase the disposable income of the M40 group in Malaysia, which has often been disregarded as the focus tends to be on the B40 and hardcore poor communities.

In addition, To make the individual income tax structure more progressive,it is proposed the income tax rate for resident individuals at the chargeable income band of RM100,001 to RM250,000 be increased by 1 percentage point, while the chargeable income band of between RM250,001 to RM400,000 be increased by 0.5 percentage points. The two chargeable income bands are combined and subject to a tax rate of 25%.For the chargeable income band between RM400,001 to RM600,000 the tax rate is proposed to be increased by 1 percentage point from 25% to 26%. eanwhile, the chargeable income band between RM600,001 to RM1 million will be increased by 2 percentage points and will be combined with the RM1,000,001 to RM2 million band and subject to the tax rate at 28%.

A comparison of the current individual income tax rate and the proposed tax rate are as follows:

Chargeable Income (RM)	Current Tax Rate (%)	Proposed Tax Rate (%)
0 - 5,000	0	0
5,001 - 20,000	1	1
20,001 - 35,000	3	3
35,001 - 50,000	8	6
50,001 - 70,000	13	11
70,001 - 100,000	21	19
100,001 - 250,000	24	25
250,001 - 400,000	24.5	25
400,001 - 600,000	25	26
600,001 - 1,000,000	26	28
1,000,001 - 2,000,000	28	28
Over 2,000,000	30	30