🇲🇾 Budget 2026 Highlights: Malaysia’s Latest Tax Policies & Reliefs Explained
📅 Announced on: 11 October 2025
📍 Source: Ministry of Finance Malaysia (MOF Malaysia)
Malaysia’s Budget 2026 focuses on three key objectives — reducing the financial burden of middle-income families, enhancing business competitiveness, and accelerating economic transformation.
Here are the Top 10 Updates every business owner and taxpayer should know 👇
1️⃣ Langkawi & Labuan Vehicle Tax Exemption Revised
📌 Only vehicles priced below RM300,000 will remain eligible for tax exemption.
📌 Effective date: 1 January 2026
📌 Impact: High-end imported cars will no longer enjoy duty-free privileges.
2️⃣ Employment Contract Stamp Duty Exemption Increased
📌 The stamp duty exemption threshold for employment contracts has been raised to RM3,000.
📌 Benefit: Employers can save more on administrative costs when hiring new staff.
3️⃣ Higher Tax Relief for Parents of Disabled Children (Below 18 Years Old)
📌 Tax relief increased to RM10,000 per child.
📌 Covers expenses such as:
Health assessments & diagnostics
Early intervention programmes
Continuous rehabilitation treatments
4️⃣ Expanded Childcare & Kindergarten Fee Relief
📌 Extended to children aged 12 and below.
📌 Parents can claim up to RM3,000 per child annually.
📌 Encourages more families to invest in early childhood education.
5️⃣ SARA Assistance (RM100) to Be Reissued in February 2026
📌 Includes beneficiaries from:
✅ Registered daycare centres (Pusat Jagaan Harian)
✅ Temporary care or transit centres (Pusat Transit)
6️⃣ Broadened Life Insurance Tax Relief Coverage
📌 The RM3,000 personal income tax relief for life insurance premiums or Takaful contributions now extends to cover children.
📌 Aims to promote long-term family protection.
7️⃣ Excise Duty on Alcoholic Beverages Increased by 10%
📌 Effective 1 November 2025.
📌 Revenue will be directed to the Ministry of Health (MOH).
📌 Objective: curb excessive drinking and strengthen public healthcare funding.
8️⃣ Tobacco Product Excise Duty Increased
📌 Effective 1 November 2025, to support Malaysia’s “Smoke-Free Nation” initiative.
✅ Cigarettes: +2 sen per stick
✅ Cigars & cigarillos: +RM40 per kg
✅ Heated tobacco: +RM20 per kg (based on tobacco content)
9️⃣ PTPTN Loan Exemption for First-Class Honours Graduates
📌 Applicable to public university (IPTA) graduates.
📌 Must achieve a First-Class Honours Bachelor’s Degree.
📌 Family income must fall under the B40/M40 category.
🔟 2% Tax on LLP Profit Distribution (YA 2026 Onwards)
📌 Starting from Year of Assessment 2026 (YA2026), any individual partner receiving profit distributions exceeding RM100,000 from a Limited Liability Partnership (LLP) will be subject to a 2% tax.
💡 Conclusion
Budget 2026 reflects the Malaysian government’s commitment to balance social welfare and economic reform. Businesses should review these updates closely to optimise cash flow, tax planning, and compliance strategies for the upcoming year.