The Malaysia Budget 2025 was announced on 18th October 2024, with an allocation of RM421 billion. Similarly with previous years, the budget introduces several new tax incentives and updates to existing incentives for both individuals and businesses. In this article, we’ll go over the key highlights of Budget 2025 for individuals.
1) Minimum wage increased & Sumbangan Tunai Rahmah cash aid
Starting from February 2025, the minimum wage will increase from RM1,500 to RM1,700. For companies with fewer than 5 employees, this adjustment will take effect only from 1st August 2025
In addition, the government has announced that eligible recipients will receive cash aid between RM600 to RM2,500 under the Sumbangan Tunai Rahmah (STR) programme in 2025. This aid is designed to provide financial relief to those in need, and the distribution is categorised as follows:
- Households
Married individuals with or without children, and single parents earning less than RM5,000 can receive up to RM2,500 in STR assistance, depending on the number of children.
- Single Senior Citizen
Single senior citizens aged 60 and above, earning less than RM5,000, can receive RM600 in STR assistance.
- Singles
Single individuals aged 21–59 years, earning less than RM2,500, can receive RM600 in STR assistance.
The distribution dates will be in phases throughout the year and will be announced closer to the implementation period. This cash aid aims to provide Malaysians with more disposable income, which could be channelled into savings or investment opportunities.
2) Tax Relief for Medical and Education Insurance
Budget 2025 introduces enhanced tax reliefs, particularly for health and education-related expenses:
- Tax relief for medical and education insurance premiums will be increased from RM3,000 to RM4,000.
- A tax relief of up to RM1,000 now covers:
- Full medical check-ups, including mental health consultations.
- Purchase of self-test kits and devices such as glucometers and blood pressure monitors.
- Disease detection examinations like mammograms, blood tests, and pap smears.
- RM8,000 tax relief for SSPN savings and RM3,000 relief for nursery or kindergarten fees extended to YA 2027.
These measures provide critical support for healthcare and education expenses, aligning with the government’s goal to improve the quality of life.
3) Enhanced tax relief for disabled individuals
The government has made significant strides in supporting disabled individuals and their families. In Budget 2025, tax relief limits have been increased as follows:
- Disabled individual taxpayers: From RM6,000 to RM7,000.
- Taxpayers with disabled spouses: From RM5,000 to RM6,000.
- Taxpayers with unmarried disabled children: From RM6,000 to RM8,000.
This reflects the government’s commitment to creating a more inclusive and equitable society. For single disabled persons or those who have to take care of loved ones with disabilities, these increases translate to greater savings and the ability to allocate resources to other financial priorities.
4) Expanded tax relief for continuous well-being, welfare, and elderly care
With Malaysia’s ageing population, Budget 2025 highlights several measures to ease the financial burden of those caring for elderly family members.
Key updates of this include:
- Individual income tax relief for sports expenses for the taxpayer’s self, spouse and children now extends to cover the taxpayer’s parents.
- Full medical check-ups for parents now include vaccinations.
- Medical and parental care reliefs have been expanded to grandparents for services such as:
- Treatment at clinics and hospitals.
- Daycare and residential care centres.
- Dental treatments (excluding cosmetic procedures).
These initiatives aim to ease financial pressures on caregivers while promoting a culture of care for the elderly.
5) New tax relief for first-time homebuyers
In an effort to address housing affordability, Budget 2025 introduces a tax relief for first-time home buyers. This allows individuals to claim:
- Up to RM7,000 annually for properties priced up to RM500,000.
- Up to RM5,000 annually for properties priced between RM500,000 and RM750,000.
This incentive applies to agreements executed from the dates of 1 January 2025 to 31 December 2027 and is limited to properties purchased for personal use and residence, not for properties used to obtain income, such as those being rented out. By reducing the financial burden of homeownership, the government hopes to encourage more Malaysians to invest in their future through property ownership.
6) New 2% dividend tax
A new 2% tax on dividend income exceeding RM100,000 annually has been introduced. Consideration will be given to exempt:
- Dividend income from government savings schemes like EPF and PNB funds such as ASB and Amanah Saham Malaysia.
- Unit trust funds and overseas dividends that are already taxed.
This move aims to increase the government’s tax revenue without overburdening the middle class, instead impacting high-net-worth persons whose incomes are high enough for them to afford this change.
Budget 2025 is expected to have a multifaceted impact, with benefits ranging from increased disposable income to enhanced financial support for healthcare and education. For individuals, especially single earners, these measures offer opportunities to optimise savings, invest in long-term goals, and reduce tax liabilities.
For instance, a single individual earning a steady income can leverage on the expanded tax relief for medical and educational expenses to lower their taxable income while redirecting savings and cash aid toward investments. Additionally, the incentives for first-time home buyers make it an ideal time to explore the property market, potentially securing a future asset with reduced financial strain.
Now that we’ve covered the key changes in Budget 2025, individuals can confidently take advantage of these new incentives to enhance their financial well-being. From increased tax reliefs to new homeownership benefits, these changes present valuable opportunities for growing your wealth. If you’re looking to maximise your financial potential, consider exploring our tailored investment options. Take the first step toward achieving your financial goals and start your journey today with Funding Societies today!
Read Budget 2026
