How Salary Deductions Work in Malaysia (2026 Guide) (2026)
Malaysia’s 2026 payslip has a new line — SKBBK — and foreign workers are now inside EPF. Here’s the full deduction stack for Year of Assessment 2026.
EPF — now including foreign workers
| Employee | Under 60 | 60 and above |
|---|---|---|
| Malaysian citizen | 11% | 0% (employer 4%) |
| Foreign worker (from Oct 2025 wages) | 2% | 2% |
No wage cap — EPF applies to all wages (basic + bonuses + allowances; overtime and travel claims excluded). The employer pays 13% (≤ RM5,000 wages) or 12% above that. Precision caveat: under RM20,000/month, the statutory Third Schedule table — not a raw % — sets the exact ringgit.
SOCSO, EIS and the new SKBBK
SOCSO (ceiling RM6,000 since Oct 2024): Category 1 (under 60) — employer 1.75%, employee 0.50%; Category 2 (60+) — employer 1.25%, employee nil. EIS: 0.2% + 0.2% to RM6,000 — Malaysians/PRs under 60 only; foreign workers are exempt (covered under Act 4 instead). SKBBK (Lindung 24 Jam): from 1 June 2026, an extra 0.75% employee-only deduction (ceiling RM6,000 → max RM44.65/month) for 24/7 non-work accident cover — mandatory for foreign workers, voluntary for residents since July 2026.
YA 2026 tax bands and reliefs
Rates 0%–30% as in the calculator page; Budget 2026 left them unchanged (Budget 2027 proposes cuts from YA 2027 only). Reliefs: RM9,000 personal (automatic), EPF to RM4,000 within a combined RM7,000 cap, SOCSO+EIS to RM350, plus a RM400 rebate when chargeable income is ≤ RM35,000. Non-residents: flat 30%, no reliefs, no rebate.
Minimum wage
RM1,700/month for all employers from 1 August 2025 (basic wages only). The proposed RM2,000 from June 2027 is not law yet — don’t code it into 2026 payroll.
Worked examples
Example 1 — RM8,000/month (resident, under 60): EPF 880 + SOCSO 30.00 + EIS 12.00 → chargeable 82,650 → tax RM6,103.50/year → net RM6,569.37/month.
Example 2 — RM8,000/month non-resident: 30% flat → net RM5,410/month.
Common mistakes
1. Treating SKBBK as employer-paid. It’s employee-only — the employer share didn’t change.
2. Forgetting the RM7,000 combined cap. EPF relief (RM4,000) + life insurance/takaful (RM3,000) share one RM7,000 ceiling.
3. Coding the 2027 minimum wage early. RM2,000 is proposed from June 2027 — 2026 stays at RM1,700.
Try it: Malaysia salary calculator →
Malaysia — frequently asked questions
Malaysia salary FAQs
What are the YA 2026 tax rates?
0% to RM5,000, then 1/3/6/11/19/25/26/28/30% — unchanged by Budget 2026.
How much EPF do foreigners pay?
2% employee + 2% employer, mandatory since October 2025 wages.
Is SKBBK optional?
For Malaysian and PR employees it became voluntary (opt-out) from July 2026; for foreign workers it’s compulsory with no opt-out.
What reliefs reduce my chargeable income?
RM9,000 personal, EPF to RM4,000 (RM7,000 combined cap), SOCSO/EIS to RM350 — plus a RM400 rebate if chargeable income is ≤ RM35,000.