Budget 2027: what changes for your money

Budget 2027 at a glance

• Individual relief rises to RM12,000 (from RM9,000), the first increase since 2010.
• Lower rates for the middle bands: 18% (was 19%) on chargeable income of RM70,001–100,000, and 24% (was 25%) on RM100,001–150,000.
• Higher rate above RM1 million: the 30% top rate now starts at RM1 million instead of RM2 million.
• First-home stamp duty: a full exemption up to RM500,000, plus 50% off the balance for homes up to RM750,000, for agreements signed from 1 January 2027 to 31 December 2030.
• Wider reliefs for parents' care, postnatal care, sports shoes, AI subscriptions and skills courses.
• For businesses: small-value assets up to RM3,000 each, and lower SME tax rates of 14% and 16%.

Income tax rates: YA 2026 and YA 2027

Only three bands change. Everyone with chargeable income above RM70,000 pays less on the RM70,001–150,000 slice, but people above RM1 million pay 2 percentage points more on income between RM1 million and RM2 million.

Tax reliefs that change from YA 2027

The caps below stay the same; what changes is what you can claim under them.

• Parents and grandparents (RM8,000): now covers all care costs, including care at home, day care and residential care, not only medical costs.
• Health and well-being (RM10,000, formerly medical): adds postnatal care by a confinement centre or qualified carer, up to RM3,000; breastfeeding equipment (up to RM1,000) moves under this relief.
• Education and skills training fees (RM7,000): upskilling courses for you or your spouse up to RM3,000 (was RM2,000, for yourself only), and other courses for you, your spouse or your children up to RM2,000.
• Lifestyle (RM2,500): adds AI software and app subscriptions, and pet adoption and care.
• Sports (RM1,000): adds sports shoes, up to RM300.
• Domestic tourism (RM1,000): extended for one more year, to YA 2027.
• SOCSO (RM350): also covers mandatory self-employment (SKSPS) contributions.
• Donations to public universities: deductible up to 10% of aggregate income.

Buying your first home

The first-home stamp duty exemption is extended and widened for sale and purchase agreements signed from 1 January 2027 to 31 December 2030:

• Homes up to RM500,000: no stamp duty on the transfer or the loan agreement.
• Homes from RM500,001 to RM750,000: no stamp duty on the first RM500,000, and half the usual duty on the rest.
• Above RM750,000: normal stamp duty.
• Agreements signed in 2026 stay under the current rules: a full exemption up to RM500,000 only.

The stamp duty calculator now lets you choose the 2026 or 2027–2030 rules and shows your exact saving.

Freelancers and small businesses

• Small-value assets: items costing up to RM3,000 each (was RM2,000) can be claimed in full in the year you buy them, from YA 2027.
• SME companies: tax falls to 14% (was 15%) on the first RM150,000 of chargeable income and 16% (was 17%) on RM150,001–600,000, from YA 2027.
• Sole proprietors and partners pay the personal rates above, so they also benefit from the RM12,000 relief and the lower bands.

Filing Form B? Use the Form B tax calculator.

Gig and self-employed workers

• EPF matching incentive for e-hailing and p-hailing workers: up to RM600 a year (RM6,000 over a lifetime).
• SOCSO matching: 35% of contributions for e-hailing and p-hailing workers (50% where platforms also contribute), and 70% for self-employed workers in 17 non-mandatory sectors.

What this means for the tax you file in 2027

Budget 2027 doesn't change the return you file in 2027, which covers your 2026 income (YA 2026). YA 2026 keeps the current rates and the RM9,000 individual relief, with these Budget 2026 changes:

• A domestic tourism relief of up to RM1,000 (YA 2026 only).
• Learning disability assessment, early intervention and rehabilitation relief raised to RM10,000 (was RM6,000).
• Child-care and kindergarten relief now covers children up to age 12 (was 6).
• Life insurance relief can include eligible children.

When the changes become law

Budget measures are proposals until Parliament passes the Finance Bill, usually by the end of the year, and some details are set later in LHDN guidelines. We'll update this page and the calculators when the final rules are published.