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 see how a bonus changes your monthly PCB and take-home pay, enter it in the salary and PCB calculator, and use the income tax calculator for the full-year tax.
Last updated 11 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?
When your employer processes your bonus, they deduct PCB according to a monthly schedule set by LHDN. Here is how the calculation works and why the deduction in your bonus month looks disproportionate.
Method 1: Annual Projection Method (Most Common)
Your employer takes your total income for the bonus month — salary plus bonus — and projects it as if you earn that every month for the year. They then calculate the annual tax on that projected income, subtract PCB already remitted year-to-date, and deduct the balance in the bonus month.
Example using our worked case:
- Bonus month (say, March): RM6,000 salary + RM18,000 bonus = RM24,000 for the month
- Annualised: RM24,000 × 12 = RM288,000 (obviously not your actual annual income)
- Estimated annual tax on RM288,000 (after standard reliefs): substantial — this inflates the PCB deduction in March significantly
- PCB already remitted Jan–Feb (based on normal RM6,000 salary) is subtracted, and the large remainder is deducted in March
The result: Your March payslip shows a PCB deduction that can be much larger than the ~RM2,340 of tax the RM18,000 bonus actually adds, as calculated above, because the monthly projection treats one month's income as a full year's.
Method 2: Separate Bonus PCB Table
Some employers use LHDN's separate schedule specifically for bonus and commission payments. This produces a different (often still large) deduction figure.
The Reconciliation
Neither method produces the exact right amount. The PCB system is designed to approximate, not be precise. Your actual tax liability is calculated once — at e-Filing — based on your real annual income and your claimed reliefs. The difference between total PCB deducted and actual liability either becomes a refund (most common for salaried employees) 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: Log into i-Akaun, select "Caruman Sukarela", and transfer before 31 December. The relief appears in your next EA Form.
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. This relief runs until YA2025 under the current Budget framework — check whether it has been extended in subsequent Budgets.
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, pharmacies, and nursing homes.
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?
This is the normal outcome for most bonus recipients. Your employer's PCB projection (based on annualising your bonus-month income) almost always exceeds your actual annual tax liability.
The process:
- Your employer issues your EA Form by 28 February of the following year. It shows total gross income (salary + bonus) and total PCB deducted.
- You file e-Filing by 30 April (for employment income only — 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).
- LHDN processes refunds within 60–90 days of submission for e-Filers. Refunds are deposited directly into the bank account registered in your MyTax profile.
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: Travel allowances related to official duties are exempt up to RM6,000 per year under Paragraph 25B, Schedule 6 of the Income Tax Act 1967. To qualify, the allowance must be specifically for official travel duties — not a general monthly cash payment labelled "travel allowance". Structure matters for this exemption.
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.
Every guide on money.com.my is fact-checked against primary sources (Bank Negara Malaysia, Department of Statistics Malaysia, KWSP/EPF, LHDN) before publication. If you find an error, email editorial@money.com.my — corrections are published with a dated amendment note.