On 9 October, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim tabled Budget 2027, the fifth and maybe the last of the MADANI government.
The headline figure is a record RM510 billion in total spending and investment, up from RM470 billion. Within that, federal expenditure is RM459.8 billion, made up of RM376.8 billion operating and RM83 billion development. The government is forecasting 4.2% to 5.2% GDP growth for 2027 and targets a fiscal deficit of 3.3% of GDP, narrowing to 3% by 2028.
This is an expansionary budget, and very possibly the last one before GE16. So the question most readers care about is a simple one. How much more money will I actually have, and when?
One timing point before the numbers. Personal income tax changes apply from Year of Assessment 2027. That means income you earn in 2027, which you file in 2028.
When you file next year for your 2026 income, the old RM9,000 individual relief and current rates still apply.
The tax changes in one table
Three changes drive almost everything for individual taxpayers.
Firstly, individual relief rises from RM9,000 to RM12,000. This is the first change since 2010 and is expected to benefit about 5 million taxpayers.
Subsequent income tax bands are revised and reduced downwards. The RM70,001 to RM100,000 band falls from 19% to 18%, and a new RM100,001 to RM150,000 band is carved out at 24% (previously 25%). The income from RM150,001 to RM400,000 stays at 25%.
Lastly, income between RM1,000,001 and RM2,000,000 rises from 28% to 30%. That means the top 30% rate now starts at RM1 million of chargeable income, instead of RM2 million.
Here is what that means in ringgit, assuming no other changes in reliefs.
| Chargeable income (old basis) | Annual tax change | Per month |
|---|---|---|
| RM40,000 | – RM180 | – RM15 |
| RM60,000 | – RM330 | – RM28 |
| RM85,000 | – RM690 | – RM58 |
| RM100,000 | – RM840 | – RM70 |
| RM150,000 | – RM1,520 | – RM127 |
| RM250,000 | – RM1,550 | – RM129 |
| RM1,500,000 | + RM8,300 | + RM692 |
| RM3,000,000 | + RM18,300 | + RM1,525 |
Observation: the government seems to be trying to garner support from the M40 cohort, which has been hit hardest by the cost of living, and the backbone of Malaysia’s taxpayers.
Lower-income households and gig workers
For lower-income earners, the biggest measure is not a handout. It is wages.
The minimum wage rises from RM1,700 to RM2,000 a month from June 2027. That is a 17.6% increase, or RM300 a month. For a full-time minimum-wage worker, it adds RM2,100 in gross pay across the seven months it applies in 2027, more than any single cash-aid item in this budget. Micro, small and medium enterprises with annual sales below RM50 million are exempted for now.
The combined Sumbangan Tunai Rahmah (STR, translates as Rahmah Cash Contribution) and Sumbangan Asas Rahmah (SARA, translates as Rahmah Basic Contribution) allocation rises to RM16 billion from RM15 billion. STR recipients get SARA of up to RM150 a month, or RM1,800 a year, with up to 9 million people covered. SARA can now also be used for fresh produce at FAMA farmers’ markets.
For gig workers, the government and Grab will jointly fund a RM160 million package covering higher minimum earnings, vehicle maintenance and insurance help, and SOCSO contributions. The government says median net income should rise by up to RM227 a month for e-hailing drivers and RM100 for p-hailing riders.
On top of that, there is also:
- 35% of SOCSO matching for e-hailing and p-hailing workers rising to 50% if the platform also contributes.
- EPF matching of up to RM600 a year, capped at RM6,000 over a lifetime
- RM270 million in financing from BSN and Agrobank for gig workers starting a business or buying a first home.
There are an estimated 600,000 e-hailing and p-hailing workers in Malaysia.
Housing access wise, SJKP will provide up to RM20 billion in financing guarantees, aimed at 80,00 first-time buyers, particularly self-employed people without fixed payslips.
Civil servants and pensioners, especially 1.3 million civil servants at Premier Grade B and below, will receive a one-off RM1,500, paid in two instalments. That’s not all, over a million government pensioners will receive RM750, and the minimum pension rises from RM1,000 to RM1,350 a month.
Observation: It has never been better to be a government pensioner. Sure, income growth has not grew in tandem with inflation, but it does look like a budget to garner support from the present and past civil servants.
The middle-income squeeze (M40)
The M40 has long called itself the forgotten middle. This budget does address it, but nothing spectacular for those who yearn too much.
As the table above shows, someone with RM100,000 chargeable income saves about RM840 a year, or RM70 a month. Not a lot, and it should be read in context. The individual relief has been frozen for 16 years, so part of this increase simply restores ground lost to inflation.
Adults who do not receive STR, including the M40, get RM100 of SARA MADANI twice in 2027, before Hari Raya Aidilfitri and for the 70th National Day. That is RM200 per adult, for up to 13 million people.
Several existing reliefs now cover more:
- Parents’ and grandparents’ care: extends to all care expenses, not only medical costs.
- Medical: now covers postnatal care services (up to RM3,000, within the existing RM10,000 limit).
- Education: covers all fields of study for yourself, plus children’s courses and tuition in STEM, arts, languages and religion (up to RM2,000).
- Lifestyle: now includes AI subscriptions, pet vaccinations and pet adoption from registered shelters.
- Sports: now includes sports shoes.
From 1 January 2027, service tax on elderly care falls from 8% to 6%, with a full exemption on care fees up to RM96,000 a year. On a registered care home costing RM4,000 a month, that removes RM3,840 a year in service tax. For the sandwich generation, this is likely to be worth more than the income tax cut.
For Malaysian citizens buying their first home, there is a full stamp duty exemption on the transfer instrument and loan agreement for homes up to RM500,000. For first homes between RM500,000 and RM750,000, the first RM500,000 is fully exempt and the balance gets 50% off. This applies to sale and purchase agreements signed from 1 January 2027 to 31 December 2030.
The high earners (T20 and above)
It’s tempting to call this a “Robin Hood” budget, but hold your horses.
Those who are going to be affected are those earning RM 1million per annum. And even if taxed at 30%, it’s an extra of RM18,300 a year. The sum itself might be a lot, but it shouldn’t break any sweat for those earning that amount.
The tax tiers can be labelled as effectively progressive but it is by no means a redistribution engine to qualify as a “Robin Hood” budget.
The bottom line?
Budget 2027 is a modest, broad-based transfer to wage earners and middle-income taxpayers. The minimum wage increase is the largest single gain for lower-income workers. For the M40, the most valuable items may be the elderly care service tax exemption and the first-home stamp duty relief rather than the income tax cut itself. And for high earners, the burden rises only above RM1 million of chargeable income, and by at most around RM18,300 a year.
My take? Malaysians all suddenly become finance experts for a day, and many were disappointed at the freebies and benefits. The Malaysian government and citizens are still stuck in a “government with benefits” relationship. While it’s fine to dish out aid to those who need it, it has slowly evolved to be an expectation and a pre-requisite mandate to govern.
The shrewd Malaysian on the other hand, could take a stance on the sector and listed companies that might enjoy the upcoming tailwinds or headwinds that come along with the budget announcement.
We can’t control the wind but we can definitely adjust our sails.
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