Your bonus is not taxed at a special flat rate. There is no bonus tax rate in Malaysia. Your bonus is employment income — it is added to your salary for the year and taxed at your marginal rate under the same progressive schedule that applies to every ringgit you earn.
That distinction matters because it changes how you plan. If you think your bonus disappears into a black-box "bonus tax", there is nothing to do. If you understand it is marginal-rate taxation on stacked income, there are concrete actions that reduce the bill — legally, before year-end.
This guide covers the mechanics precisely: how the progressive rate applies to bonus income, how PCB (Potongan Cukai Berjadual — Malaysia's monthly tax withholding system) deducts from your bonus, and the specific reliefs that cut your chargeable income before the rates apply.
To work out the extra tax on your own bonus, use the bonus tax calculator. To see an estimate of how a bonus changes your monthly PCB and take-home pay, enter it in the salary and PCB calculator (it spreads the bonus evenly over the year, which is not LHDN's bonus-month method), and use the income tax calculator for the full-year tax.
Last updated 17 October 2026 · money.com.my Editorial
How does Malaysian income tax work?
Malaysia uses a progressive income tax system. The rate you pay increases as your chargeable income increases — but only the portion within each band is taxed at that band's rate. Lower bands remain taxed at lower rates regardless of how high your total income goes.
Chargeable income is not your gross salary. It is:
Gross employment income (salary + bonus + allowances + benefits-in-kind) minus tax reliefs you are entitled to claim
This is the number that gets run through the tax bracket table. The lower your chargeable income, the less tax you pay. Reliefs are not deductions from your tax bill — they reduce the income figure before the rates are applied, which is why maximising reliefs is the single most effective lever available to salaried workers.
PCB (Potongan Cukai Berjadual) is the monthly withholding mechanism. Your employer deducts estimated tax from your salary each month and remits it to LHDN on your behalf. PCB is not your final tax — it is a running prepayment. At year-end, when you file e-Filing, your actual tax liability is calculated. If PCB over-collected, you get a refund. If it under-collected, you pay the shortfall.
What are the income tax brackets for YA2025?
These rates apply to chargeable income — not gross income — for a resident individual. LHDN publishes one table for Years of Assessment 2023, 2024 and 2025, so the same bands apply to the return you file in 2026 (YA2025). Budget 2027 proposes changes to the top bands from YA2027; they are not law until the Finance Bill passes and are not used below.
| Chargeable Income (RM) | Tax Rate | Tax on Band | Cumulative tax at start of band |
|---|---|---|---|
| 0 – 5,000 | 0% | RM0 | RM0 |
| 5,001 – 20,000 | 1% | RM150 | RM0 |
| 20,001 – 35,000 | 3% | RM450 | RM150 |
| 35,001 – 50,000 | 6% | RM900 | RM600 |
| 50,001 – 70,000 | 11% | RM2,200 | RM1,500 |
| 70,001 – 100,000 | 19% | RM5,700 | RM3,700 |
| 100,001 – 400,000 | 25% | RM75,000 | RM9,400 |
| 400,001 – 600,000 | 26% | RM52,000 | RM84,400 |
| 600,001 – 2,000,000 | 28% | RM392,000 | RM136,400 |
| Above 2,000,000 | 30% | — | RM528,400 |
Reading this table: If your chargeable income is RM80,000, you do not pay 19% on RM80,000. You pay 0% on the first RM5,000, then 1% on the next RM15,000, then 3% on the next RM15,000, then 6% on the next RM15,000, then 11% on the next RM20,000, then 19% on the remaining RM10,000. Each band is taxed at its own rate.
How is your bonus taxed?
Scenario A: Bonus Stays Within Your Current Bracket
You earn RM5,500/month (RM66,000/year). After standard reliefs — RM9,000 personal relief, RM4,000 EPF relief (assuming RM5,500 × 11% × 12 = RM7,260 EPF, which exceeds the RM4,000 cap), RM1,500 lifestyle relief — your chargeable income is approximately RM66,000 − RM14,500 = RM51,500. This sits in the 11% band (RM50,001–RM70,000).
You receive a RM10,000 bonus. Total gross income becomes RM76,000. After the same reliefs: RM76,000 − RM14,500 = RM61,500. Still in the 11% bracket. The entire bonus is effectively taxed at 11%. Additional tax from the bonus: RM10,000 × 11% = RM1,100.
Scenario B: Bonus Crosses a Bracket Boundary — Worked Example
This is the scenario that surprises most people.
Setup: RM6,000/month salary. RM18,000 bonus received in the same year.
| Amount | |
|---|---|
| Monthly salary | RM6,000 |
| Annual salary | RM72,000 |
| Bonus | RM18,000 |
| Total gross income | RM90,000 |
Applying standard reliefs:
| Relief | Amount |
|---|---|
| Personal relief | RM9,000 |
| EPF contribution (11% × RM72,000 = RM7,920, capped) | RM4,000 |
| Lifestyle relief (books, internet, phone or computer) | RM2,500 |
| Total reliefs | RM15,500 |
Chargeable income: RM90,000 − RM15,500 = RM74,500
Tax calculation on RM74,500:
| Band | Income in Band | Rate | Tax |
|---|---|---|---|
| RM0 – RM5,000 | RM5,000 | 0% | RM0 |
| RM5,001 – RM20,000 | RM15,000 | 1% | RM150 |
| RM20,001 – RM35,000 | RM15,000 | 3% | RM450 |
| RM35,001 – RM50,000 | RM15,000 | 6% | RM900 |
| RM50,001 – RM70,000 | RM20,000 | 11% | RM2,200 |
| RM70,001 – RM74,500 | RM4,500 | 19% | RM855 |
| Total tax | RM4,555 |
Now compare without the bonus: Chargeable income = RM72,000 − RM15,500 = RM56,500.
| Band | Income in Band | Rate | Tax |
|---|---|---|---|
| RM0 – RM5,000 | RM5,000 | 0% | RM0 |
| RM5,001 – RM20,000 | RM15,000 | 1% | RM150 |
| RM20,001 – RM35,000 | RM15,000 | 3% | RM450 |
| RM35,001 – RM50,000 | RM15,000 | 6% | RM900 |
| RM50,001 – RM56,500 | RM6,500 | 11% | RM715 |
| Total tax (no bonus) | RM2,215 |
Tax attributable to the RM18,000 bonus: RM4,555 − RM2,215 = RM2,340
Effective rate on the bonus: RM2,340 ÷ RM18,000 = 13%. Not a flat 13% — the blended result of RM13,500 of the bonus taxed at 11% (RM1,485) and RM4,500 taxed at 19% (RM855), because the bonus pushed income across the RM70,000 bracket boundary.
This is why the "bonus tax rate" question has no single answer. It depends on where your chargeable income lands relative to the bracket boundaries.
Why is so much PCB deducted from your bonus?
We could not read LHDN's PCB specification on 17 October 2026; here is what can and cannot be said.
Bonus-month PCB: what we could not confirm
Some payroll explainers describe the bonus-month PCB as the employer projecting the bonus-month income across the year, subtracting PCB already remitted, and deducting the balance in the bonus month. We could not confirm that description against LHDN's PCB specification (hasil.gov.my was blocked to us on 17 October 2026), so it is not stated here as LHDN's method and the earlier worked projection (RM24,000 × 12 = RM288,000) is withdrawn.
What the guide can say: the PCB deducted in the bonus month can be larger than the roughly RM2,340 of annual tax the RM18,000 bonus adds in the worked example above, because PCB is an estimate paid in advance. Your payslip shows the amount your employer's payroll system produced; ask HR which LHDN method it uses.
A separate bonus schedule (unverified)
Some payroll guides say employers can use a separate LHDN schedule for bonus and commission payments. We could not confirm this from LHDN's own documents, so treat it as unverified and ask your payroll team.
The Reconciliation
PCB is an estimate. Your actual tax is worked out once, when you file, from your real annual income and reliefs. The difference between total PCB deducted and actual liability either becomes a refund or a shortfall to pay.
The key point: High PCB in your bonus month is not an extra penalty. It is the system front-loading your tax payments. You are not paying more — you are paying sooner.
How can you legally reduce the tax on your bonus before year-end?
Tax reliefs reduce your chargeable income before the bracket rates are applied. Every RM1,000 of additional relief saves you RM110 if you are in the 11% bracket, RM190 in the 19% bracket, or RM250 in the 25% bracket. The reliefs below are the most impactful for salaried employees with bonus income.
1. EPF Voluntary Contributions — Inside the RM7,000, Not on Top
LHDN's YA2025 table (item 17) allows up to RM4,000 for mandatory contributions or voluntary contributions to EPF, and up to RM3,000 for life insurance, family takaful or additional voluntary contributions to EPF, within a combined RM7,000. If your mandatory EPF already uses the RM4,000, a voluntary top-up can only go into the RM3,000 slot, and only to the extent you have not used it on life insurance. It is not an extra RM4,000.
Action: Make the voluntary contribution through KWSP before 31 December and keep KWSP's statement for your return. We could not reach KWSP's website on 17 October 2026 to confirm its menu path, and an employer's EA Form records what your employer deducted, so do not rely on it to show a top-up you paid yourself.
2. PRS (Private Retirement Scheme) — RM3,000 Relief
Contributions to any PRS provider approved by the Securities Commission (Public Mutual, CIMB Principal, Manulife, Kenanga, etc.) qualify for up to RM3,000 relief per year. LHDN's Form BE notes (YA2024 edition) state that this relief is "effective from the Year of Assessment 2012 until 2025"; we found no extension to YA2026 in the Budget 2027 data, so confirm with LHDN before relying on it for the return you file in 2027.
Action: Open a PRS account online (takes 15 minutes), contribute before 31 December. This is separate from EPF — you can claim both.
3. SSPN — RM8,000 Relief (If You Have Children)
Net deposits into SSPN (Skim Simpanan Pendidikan Nasional — the national education savings scheme run by PTPTN) qualify for up to RM8,000 relief per year. Net deposits = deposits minus withdrawals for the year.
Action: Open an SSPN account for each child at PTPTN.com.my. Even if your child is young, depositing RM8,000 before year-end and withdrawing it next year captures one year of relief. Withdrawals must be for education purposes once the child reaches tertiary level.
4. Life Insurance + EPF Combined — RM7,000
For YA2025 (LHDN item 17), EPF contributions qualify for up to RM4,000, and life insurance or family takaful premiums (or additional voluntary EPF contributions) for up to RM3,000, with a combined cap of RM7,000. If your mandatory EPF already uses the RM4,000, the RM3,000 slot is the headroom left for life insurance or a voluntary EPF top-up — verify your EA Form figures.
5. Medical Insurance (Private) — RM4,000
Premiums paid for private medical insurance (medical cards, hospitalisation policies) — separate from life insurance — qualify for up to RM4,000 relief for YA2025 (it was RM3,000 for YA2023 and YA2024). This includes medical cards issued by Great Eastern, Prudential, AIA, Allianz, and others.
6. Medical Expenses for Parents — RM8,000
Costs for medical treatment, care, and nursing of your parents qualify for up to RM8,000 relief. This is one of the most underutilised reliefs. Keep receipts from clinics, hospitals and care providers, and the registered medical practitioner's confirmation LHDN requires. The Budget 2027 annex lists treatment at clinics and hospitals, care at home, in day-care centres and in residential care centres, and dental treatment (excluding cosmetic), for parents and grandparents.
7. Lifestyle Relief — RM2,500
Covers purchases of books, journals, magazines, internet subscription, mobile phone, computer/tablet, and skill-improvement course fees. Maximum RM2,500/year. Sports equipment, gym membership and sports facility fees are not part of it: they fall under a separate additional sports relief of up to RM1,000 (YA2025). Most salaried workers claim this automatically — but verify you have receipts. The relief requires documented purchases, not self-declaration alone.
8. Bonus Timing — The January Deferral
If your chargeable income in the current year is already near a bracket ceiling and you have exhausted most reliefs, ask your employer whether your bonus can be paid in January of the following year. This moves the income to a new tax year with a fresh set of personal reliefs.
When this works: You are close to the RM70,000 or RM100,000 bracket boundary, you have fully utilised current-year reliefs, and next year's income is unlikely to cause the same bracket-crossing problem.
When this does not work: Your employer pays all bonuses in the same cycle, HR systems do not allow individual deferrals, or the bonus is contractually tied to a specific performance period ending date.
What If Your Employer Over-Deducted PCB?
If the PCB deducted over the year is more than your actual tax, the difference is refunded when you file.
The process:
- Your employer issues your EA Form by the last day of February of the following year (Income Tax Act 1967, s83(1A)). It shows total gross income (salary + bonus) and total PCB deducted.
- You file e-Filing by the date in LHDN's return-form filing programme (we could not read it on 17 October 2026) for employment income only, with no business income. Enter your EA Form figures and claim all eligible reliefs.
- e-Filing calculates your actual tax liability. If it is less than PCB deducted, the difference is your tax refund (bayaran balik cukai).
- Refunds are deposited into the bank account registered in your MyTax profile. We found no LHDN-published processing time, so we give none.
Critical: Update your bank account details in MyTax (mytax.hasil.gov.my) before filing. Refunds go to the account on file — if it is outdated or closed, the refund process stalls significantly.
Are commission and allowances taxed like a bonus?
All are employment income and taxed the same way as salary under Malaysian law. The distinction matters only for a handful of exemptions:
Commission: Added to gross employment income. No special rate. No exemption. Taxed at marginal rate.
Allowances — mostly taxable: Petrol allowance, phone allowance, and entertainment allowances paid as cash are generally taxable employment income.
Allowances — partially exempt: Some allowances for official travel are exempt, but the guide's earlier citation was wrong: paragraph 25B of Schedule 6 to the Income Tax Act 1967 (AGC text as at 1 November 2023) exempts gratuities paid out of public funds on termination of a contract of employment, not travel allowances. The exemption for official travel allowances comes from an exemption order we could not retrieve, so the RM6,000 figure is held: check LHDN's current rules before treating any part of an allowance as exempt.
Benefits-in-kind (BIK): Employer-provided cars, accommodation, and company phone usage are treated as employment income under a prescribed value formula set by LHDN. These appear on your EA Form.
Key takeaway: If your bonus is labelled a "performance bonus", "13th-month salary", "variable pay", "incentive award", or "profit-sharing payment" — it is all the same to LHDN. Employment income. Progressive tax. No special treatment.
How are directors' fees and bonuses taxed?
Directors of Malaysian companies who receive fees, bonuses, or other remuneration from their companies are taxed in the same way as salaried employees — the income is employment income under Section 13 of the Income Tax Act 1967 and subject to the same progressive rates and PCB requirements.
The distinction between director's fees and dividends matters for planning purposes: dividends paid from after-tax company profits are exempt in the hands of the recipient under Malaysia's single-tier tax system (since 2008). Fees and bonuses are not. For director-shareholders, the optimal split between salary/bonus and dividends is a separate planning exercise beyond the scope of this guide.
Daniel Lim's Verdict — The Right Strategy by Income Level
Tax planning around bonuses is not the same problem for everyone. Here is the honest assessment by income bracket.
If your total income is below RM50,000/year
Standard reliefs — RM9,000 personal + RM4,000 EPF + RM2,500 lifestyle — bring most people to a chargeable income in the 3%–6% bracket. The tax on a RM5,000–10,000 bonus at these rates is RM150–600. The compliance overhead of opening PRS accounts or making voluntary EPF contributions to save RM200 in tax is not worth it at this income level. File e-Filing, claim your standard reliefs, collect your refund if any, move on.
If your total income is RM70,000–RM150,000/year
This is the bracket where planning makes a meaningful difference. You are straddling the 11%/19% or 19%/25% boundary. A RM15,000–30,000 bonus can push significant income into a higher bracket.
Priority order:
- PRS (RM3,000 relief) — easiest to execute, takes 15 minutes to open an account online
- SSPN if you have children (up to RM8,000) — high impact
- EPF voluntary contribution (uses your unused RM3,000 life-insurance slot) — if you are comfortable locking money in EPF
- Medical insurance premiums (RM4,000 for YA2025) — claim if you are paying and not already claiming
A mid-income earner who maxes PRS (RM3,000) + SSPN (RM8,000) has RM11,000 in additional chargeable income reduction. At the 19% rate (chargeable income RM70,001–RM100,000), that saves RM2,090 in tax. If the RM3,000 life-insurance slot is unused, a voluntary EPF top-up can add up to RM3,000 more (RM14,000 in total, saving RM2,660). The cost is real money going into savings instruments — but the money is not lost, just allocated differently.
If your total income exceeds RM150,000/year
You are in the 25% bracket (chargeable income RM100,001–RM400,000). Every eligible relief is worth 25 sen per ringgit. At this level:
- All reliefs above apply and should be maxed
- Timing strategy becomes worth exploring with your employer
- Medical expense receipts for parents deserve careful documentation (RM8,000 relief at 25% = RM2,000 tax saved)
- Review whether your bonus structure can be partially replaced with non-cash benefits that have lower imputed values under LHDN's BIK schedule (e.g., employer-provided medical coverage vs. cash medical allowance)
The underlying principle does not change at any income level: the tax rate is fixed by law. The chargeable income is not. Every legal reduction in chargeable income before the rate applies is money you keep.
Related Guides
- All Tax Reliefs in Malaysia 2026 — Complete List
- Malaysia Income Tax Guide 2026 — How to File and What You Pay
- EPF Contribution Tax Relief — How Much You Can Claim
- PRS (Private Retirement Scheme) Malaysia — Is It Worth It?
- SSPN Education Savings — Tax Relief and How to Maximise It
Amendment, 10 October 2026. The reliefs and rates in this guide were checked against LHDN's YA2025 relief and rate tables (return filed in 2026; hasil.gov.my/en/individu/pelepasan-cukai/ and /kadar-cukai/, both last updated 26 June 2026). Medical and education insurance is RM4,000 for YA2025 (RM3,000 for YA2023 and YA2024), not RM3,000. Sports equipment and gym membership are not part of the RM2,500 lifestyle relief; LHDN lists them as a separate additional relief of RM1,000. The bracket table was the old YA2022 one (8%, 13%, 21%, 24%, 24.5%, 25%); it now shows LHDN's YA2023–2025 bands (0/1/3/6/11/19/25/26/28/30%). Every example was recalculated: Scenario A now adds RM1,100 of tax (RM10,000 at 11%); Scenario B now has tax of RM4,555 with the bonus and RM2,215 without, so the bonus costs RM2,340, about 13% (RM13,500 at 11% plus RM4,500 at 19%), not RM2,700 at 15%; the per-RM1,000 relief savings are RM110, RM190 and RM250; the parents' medical example at 25% saves RM2,000. The planning example no longer treats voluntary EPF as an extra RM4,000: under LHDN's item 17 it sits inside the RM4,000 EPF slot or the RM3,000 life-insurance slot (combined RM7,000), so PRS RM3,000 plus SSPN RM8,000 saves RM2,090 at 19% (RM2,660 if the unused life-insurance slot takes a further RM3,000 voluntary EPF top-up). The "RM5,000–8,000 or more" PCB range for the bonus month was removed: it was not derived from LHDN's PCB schedule and was inconsistent with the guide's own figures. Still outstanding: the actual bonus-month PCB amount depends on LHDN's PCB schedule and your employer's method, and is not quantified here.
Amendment, 11 October 2026. Structural change only: a short answer was added at the top and section headings were rewritten as the questions they answer. No figure, rule or source was changed. Every figure in the short answer already appears in the body of this guide, and nothing listed above as still outstanding is used in it.
Amendment, 17 October 2026 (evidence batch H). We re-read this guide against the Income Tax Act 1967 (Act 53, AGC text as at 1 November 2023), LHDN's Form BE explanatory notes (YA2024 edition) and the Budget 2027 tax annex ("Kedudukan Semasa"). hasil.gov.my returned a "URL blocked" page to us on 17 October and kwsp.gov.my returned HTTP 403, so LHDN and KWSP pages were not fetched again and nothing was fetched by other means. Confirmed: the YA2023 to YA2025 bands in the table (the annex, Lampiran 1, "Kedudukan Semasa", lists the same ten bands) and every figure in the two worked examples (RM4,555 with the bonus, RM2,215 without, RM2,340 added, RM1,100 in Scenario A); the employer's EA statement is due on or before the last day of February (Income Tax Act s83(1A)). Corrected: the travel-allowance paragraph cited "Paragraph 25B, Schedule 6", which in the Act exempts gratuities paid out of public funds on termination of a contract, not travel allowances; the PCB paragraphs described the bonus-month method as annualising the month ("RM24,000 × 12 = RM288,000") and as a "Method 1" and "Method 2" that employers choose between, which we could not confirm from LHDN's PCB specification, so the descriptions are withdrawn and the headings now say so; the PRS paragraph now gives LHDN's stated end date (YA2025); "the relief appears in your next EA Form" for a voluntary EPF top-up is withdrawn (the EA Form records what your employer deducted); the parents' medical paragraph now follows the annex's list of what is covered. Removed as unsourced: "LHDN typically processes refunds within 60–90 days" (FAQ and body); the filing date "30 April" (we could not read LHDN's filing programme; the guide now points to it); "28 February" for the EA Form (the Act says the last day of February); the KWSP menu path "i-Akaun, Caruman Sukarela"; "pharmacies" and "nursing homes" as receipt sources for parents' medical relief. Held, unchanged: the amount of PCB your employer will deduct in a bonus month, which depends on LHDN's PCB schedule and your employer's method. Budget 2027 proposes changes to the bands and the individual relief from YA2027; they are not law until the Finance Bill passes and are not used here. Review-round fixes (17 October 2026): (1) the "What if your employer over-deducted PCB?" opening no longer says over-deduction is "the normal outcome for most bonus recipients" or that the employer's PCB "almost always exceeds" actual tax; it now says only that if the PCB deducted over the year is more than your actual tax, the difference is refunded when you file. (2) The reconciliation paragraph now says "PCB is an estimate" and drops "most common for salaried employees" and "Neither method". (3) The two method headings are now "Bonus-month PCB: what we could not confirm" and "A separate bonus schedule (unverified)", and the section opening says we could not read LHDN's PCB specification on 17 October 2026 (H3 count unchanged). (4) The calculator pointer in the introduction now says the salary calculator shows an estimate that spreads the bonus evenly, not LHDN's bonus-month method. Removed (named for the record): from the refund FAQ, "LHDN typically processes refunds within 60–90 days of submission" (earlier in this amendment) and "refunds are paid via direct bank transfer, not cheque" (no LHDN source read; the guide still says refunds go to the account registered in MyTax, which is also unsourced beyond LHDN's e-Filing flow and is HELD). Evidence and hashes: docs/verification-log/evidence-batch-h-oct17/evidence.md.