Malaysia Income Tax 2025: What to Do Before Year-End to Save More
- Wealth Vantage Advisory
- 3 days ago
- 6 min read
Get ready for Malaysia Income Tax 2025 tax filing! Learn the key tax reliefs, deadlines, and year-end strategies to maximise your savings before 31 December 2025.
As we approach the year’s end, it’s not just the festive season that should be on your radar, it’s also the time to start preparing for your tax filing for the Year of Assessment (YA) 2025.
While the actual filing will only take place in 2026, planning and preparation should begin now. Being proactive helps you maximise your tax reliefs, stay compliant, and align your tax strategy with your broader financial goals.
Understanding the Tax Timeline: YA 2025 and Filing in 2026
Before diving into reliefs and deductions, let’s clarify the timeline:
Year of Assessment 2025 (YA 2025) refers to income earned between 1 January 2025 and 31 December 2025.
You’ll file your tax return for YA 2025 in the first half of 2026.
Understanding this timeline is important because many reliefs and deductions depend on actions taken before 31 December 2025, meaning, the time to act is now, not next year.
What’s New: Key Tax Reliefs for YA 2025
The Malaysian government has retained many popular reliefs while continuing to support families, education, digitalisation, and sustainability.
Here’s a breakdown of the main reliefs available for YA 2025, and how you can take advantage of them before the year ends.
a) Individual & Basic Reliefs
Basic individual relief: RM9,000
b) Education & Upskilling
Education fees for tertiary or postgraduate studies: RM7,000
Personal upskilling or self-enhancement courses: RM2,000 (extended until YA 2026)
c) Disability Reliefs
Disabled individual: RM7,000
Disabled spouse: RM6,000
Basic supporting equipment for disabled person, spouse, child or parent: RM6,000
d) Housing Loan Interest (First-Time Homebuyers)
Interest on housing loans (house price ≤ RM500,000): RM7,000
If the house price is between RM500,000 and RM750,000: RM5,000
e) Lifestyle Related Reliefs
Lifestyle purchases (books, computer, smartphone, broadband,self-skill courses): RM2,500
Sports related purchases (equipments, sports facilities rental, gym membership etc): RM1,000
EV charging facility or food waste composting machine: RM2,500 (extended to YA 2027)
f) Medical Expenses
Medical expenses for serious diseases: RM10,00 including fertility treatment for married couples, vaccination expenses (RM1,000 limit), Complete medical examination (RM1,000 limit), expenses for children with limited learning disabilities (including autism, ADHD, Global Developmental Delay (GDD), Down Syndrome, Specific Learning Disabilities
Covid-19 Test (RM1,000 limit)
Mental Health Screening (RM 1,000 limit)
Purchase of Self-Test Medical Devices (Limit to RM 1,000)
Breastfeeding equipment for working mothers - applicable with child under 2 years age: RM1,000 (claimable once every 2 years)
Medical expenses for parents: RM8,000 (including special needs care & treatment expenses)
g) Spouse and Child
Spouse with no income or alimony to former wife: RM4,000
Unmarried child under 18: RM2,000
Registered childcare or kindergarten fees: RM3,000 (child aged 6 and below)
Child in full-time education (aged 18 above): RM2,000
Child pursuing diploma/degree and above: RM8,000
Expenses for children under 18 with learning disabilities: RM6,000
Net savings in SSPN (National Education Savings Scheme): RM8,000
g) Retirement, Insurance & Contributions
Life insurance / EPF contributions: RM3,000
Additional EPF relief (employee’s own contribution): RM4,000
Education or medical insurance premiums: RM4,000
SOCSO + Employment Insurance System (EIS): RM350
Private Retirement Scheme (PRS) & deferred annuity scheme: RM3,000 (extended until YA 2025)
Each of these reliefs represents a potential tax saving opportunity. The key is to plan your expenses before the year ends, whether it’s making that PRS top-up, paying your child’s SSPN savings, or enrolling in an upskilling course before December 2025.
Why Early Preparation Matters
Many taxpayers only start thinking about their Malaysia Income Tax 2025 when filing season arrives in March or April. By then, it’s often too late to take advantage of tax-saving opportunities.
Here’s why you should start preparing now:
You can still influence your taxable income before 31 December 2025.
For example, if you make a PRS contribution or pay education fees before year-end, it qualifies for YA 2025 relief.
Avoid last-minute stress. Filing taxes requires collating receipts, statements, and supporting documents — which is much easier when done progressively.
Optimise financial decisions. Tax planning is linked to your overall financial goals: from retirement to education to home ownership.
Cash flow readiness. Knowing your estimated tax liability helps you plan ahead and avoid surprises in 2026.
Your Pre-Filing Checklist for YA 2025
Here’s a step-by-step checklist to make your 2026 filing smoother and stress-free.
Step 1: Organise Your Income Records
Form EA from your employer.
Payslips, bonuses, and other remuneration documents for 2025.
Dividend, rental, or freelance income statements (if applicable).
Business records if you are self-employed or own a sole proprietorship (income, expenses, receipts).
Step 2: Collect Proof for All Claimable Reliefs
Start compiling receipts and documents throughout 2025, not just at the end:
Medical bills, insurance premium statements, SSPN deposit slips, PRS receipts.
Education fees and course receipts.
Housing loan interest statements.
Broadband or digital device receipts (for lifestyle relief).
Childcare or kindergarten fee receipts (for children under 6).
Proof of contributions to EPF, SOCSO, and life insurance.
Step 3: Confirm Your Tax Residency & Filing Form
Resident taxpayers (≥ 182 days in Malaysia) can enjoy full reliefs.
Non-residents are taxed at a flat rate without reliefs.
Form BE: Employment income only.
Form B: Employment + business/freelance income.
Step 4: Estimate Your Tax Payable
Review your total taxable income and reliefs.
Consult your financial planner to estimate your potential liability.
If you expect a balance payable, plan your cash flow to avoid scrambling in 2026.
Step 5: File On Time (or Earlier)
Remember the filing deadlines for 2026:
Form BE: e-Filing by 15 May 2026
Form B: e-Filing by 15 July 2026
Late filing attracts penalties ranging from RM200 to RM20,000 or imprisonment (for severe cases), plus tax surcharges up to 45% of the underpaid amount.
Common Mistakes to Avoid
Even diligent taxpayers can fall into avoidable traps. Here are some to watch for:
Missing Out on Reliefs
Many forget smaller reliefs like PRS, SSPN, upskilling courses, or sports equipment. Review the full relief list before year-end to ensure you’re maximising your entitlements.
Misplacing Receipts
If you can’t produce supporting documents when requested, LHDN can disallow your claims, even if legitimate. Go digital: scan receipts into a cloud folder.
Filing the Wrong Form
If you have side income or run a small business, you must file Form B, not BE. Filing the wrong form may result in incorrect tax assessment.
Underestimating Your Tax Liability
Side gigs, commissions, or rental income can easily push you into a higher bracket. Always include all income sources to avoid penalties for under-declaration.
Missing the Filing Deadline
A simple oversight can cost you penalties. Set calendar reminders now for your 2026 filing deadlines.
Integrating Tax Planning with Your Financial Goals
Tax filing is not just about compliance — it’s a powerful part of your financial planning strategy.
Here’s how smart tax planning ties into your wealth journey:
a) Retirement Planning
Top-up your EPF or PRS contributions before December 2025 to save RM3,000 of relief for either one contribution . Not only do these qualify for reliefs, they also accelerate your long-term savings growth.
b) Education Planning
Contributing to SSPN accounts for your children earns up to RM8,000 in relief — while building their education fund.
c) Insurance & Risk Planning
Your life and medical insurance premiums not only protect your family but also reduce taxable income. You can earn up to RM4,000 in relief.
d) Home Ownership
If you’re planning to buy your first home, ensure your financing and purchase date fall within eligibility windows to claim housing loan interest relief up to RM7,000.
e) Personal Development
Investing in upskilling or postgraduate education not only enhances career prospects but is also tax-deductible up to RM7,000 in relief.
By integrating these decisions with your overall wealth plan, you’re not just saving on taxes — you’re building long-term financial independence.
Tax Readiness as a Financial Discipline
Think of tax readiness as part of your annual financial review. Just like you track your net worth, rebalance your investment portfolio, and review your insurance coverage, tax preparation should become a yearly habit.
At Wealth Vantage Advisory, we encourage clients to take these steps:
Quarterly reviews — update income and expense records regularly.
December review — make final year-end tax planning decisions.
March–May (the next year) — file your return early and keep copies of your submission and receipts.
Post-filing review — analyse your tax results to plan better for the next year.
Over time, this discipline not only avoids last-minute panic but reinforces your path toward financial independence, where you control your money instead of reacting to it.
Start Now, Save Later
As 2025 draws to a close, it’s time to take care of your income, expenses, and eligible reliefs. Tax filing for YA 2025 may only happen in early 2026, but what you do before 31 December 2025 will determine how much you save.
Preparing early gives you:
More opportunities to reduce taxable income
Smoother filing experience in 2026
Greater financial confidence and clarity
So, start now, review your reliefs, compile your documents, and make any final year-end financial moves.
A little planning today can lead to meaningful savings next year, and that’s a habit worth keeping for life.