Malaysia Budget 2027: Key Updates for Employers, HR Teams and Businesses

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Last updated: 12 October 2026

The Malaysia Budget 2027 was presented on Friday, 9 October 2026, by Prime Minister Datuk Seri Anwar Ibrahim, with federal government expenditure set at RM459.8 billion.

The measures below are Budget proposals. They take effect once the Supply Bill is passed by Parliament and the relevant ministries issue implementation guidelines.

Beyond the headline spending measures, the Budget includes several changes directly relevant to employers and businesses, covering wages, EPF, PERKESO, tax, workforce development and business support.

Below are the key updates for HR teams and employers to keep on their radar.

Malaysia Budget 2027 Key Takeaways for Employers​

• The minimum wage will rise from RM1,700 to RM2,000 per month from June 2027, with an exemption for MSMEs with annual sales below RM50 million.
• A RM2,500 minimum monthly salary is planned for semi-skilled workers and graduates.
• SMEs with fewer than 75 employees get a RM200 per employee subsidy for the first-year MediAsas premium.
• Employers that repay staff PTPTN loans can claim tax deductions until 31 December 2028.
• New parents can claim up to RM3,000 tax relief for postnatal care, and the individual relief limit rises to RM12,000.
• From 1 January 2027, spouses of Category I Employment Pass holders on dependant passes may work in Malaysia.

Minimum Wage and Salary Updates​

• With the Malaysia Budget 2027, Malaysia’s minimum wage will increase from RM1,700 to RM2,000 per month from June 2027.
• MSMEs with annual sales below RM50 million are stated to be exempted from the RM2,000 minimum wage policy.
• GLICs and GLCs will raise their living wage benchmark from RM3,100 to RM3,400 per month, benefiting around 230,000 workers.
• A minimum monthly salary of RM2,500 for semi-skilled workers and graduates will be introduced as the first step in reforming the national wage framework. Coverage and timing are subject to further guidelines.
• The income threshold for the Disabled Workers’ Allowance (EPOKU) rises from RM1,700 to RM2,000, in line with the new minimum wage.

EPF and Retirement Savings​

• All Malaysian citizens will be automatically registered as EPF members when they turn 18, allowing retirement savings to begin earlier.
• E-hailing and p-hailing workers will receive an EPF matching contribution of up to RM600 per year, capped at RM6,000 over a lifetime.
• EPF members reaching ages 55 and 60 may opt into the i-Emas scheme for monthly withdrawals.
• The MediAsas insurance plan will launch in January 2027.
• EPF members below age 55 may use Account Sejahtera to pay MediAsas premiums.
• SMEs with fewer than 75 employees will receive a RM200 subsidy per employee for the first-year MediAsas premium, capped at 50 employees per company.

PERKESO and Social Protection​

• The Malaysia Budget 2027 will see more than 200,000 self-employed individuals across 17 non-mandatory sectors receive a 70% government matching incentive for PERKESO contributions.
• E-hailing and p-hailing workers will receive a 35% PERKESO matching contribution, rising to 50% if platform companies also contribute.
• Tax relief for PERKESO contributions will be expanded to cover mandatory contributions to Lindung Kendiri.
• An additional relief of up to RM150 will apply to voluntary contributions to Lindung 24 Jam and Lindung Kendiri.
• PERKESO will provide health screening vouchers for commercial vehicle drivers to detect health conditions that could affect driving safety.

Gig Economy Measures​

• The Malaysia Budget 2027 highlighted that a RM160 million package, jointly funded by the government and Grab, will be introduced from 2027 to improve gig worker income and welfare.
• Additional support will be provided for vehicle maintenance and insurance costs.
• A Gig Consultative Council is working on minimum income rates, calculation formulas and social protection standards, with the framework expected to be finalised in early 2027.
• BSN and Agrobank will provide RM270 million in financing for gig workers looking to start businesses or buy their first homes.

Individual Income Tax​

• Resident taxpayers with chargeable income from RM70,001 to RM100,000 will be taxed at 18%.
• Those with chargeable income from RM100,001 to RM150,000 will be taxed at 24%.
• The tax rate for individuals earning above RM1 million will increase to 30%.
• The tax changes are expected to provide up to RM1,600 in additional disposable income to around five million taxpayers.
• The individual tax relief limit will increase from RM9,000 to RM12,000.
• Tax relief will also be expanded to cover areas including:
  • Postnatal care, covering confinement centres or qualified individuals after childbirth, up to RM3,000
  • Caregiving expenses for parents and grandparents
  • Sports shoes
  • Education and skills training
  • Children’s tuition fees
  • AI subscriptions and vaccinations
• Postnatal care and breastfeeding equipment (up to RM1,000 for children aged two and below) will sit under the renamed Health and Well-being relief category, which keeps an overall cap of RM10,000.
• Service tax on elderly care services will be reduced from 8% to 6% from 1 January 2027.

Tax Incentives for Employers​

• Employers will receive tax deductions when they repay employees’ PTPTN loans on their behalf.
• The incentive will apply to repayments made between 1 January 2027 and 31 December 2028.
• PTPTN borrowers earning up to RM2,500 a month may defer repayments in 2027, while those earning RM2,501 to RM3,000 pay a minimum of RM50 a month. This can help employers position PTPTN support as a benefit for early career hires.
• Companies participating in Bakat Madani can qualify for tax deductions from 29 June 2026 until 31 December 2030.

Business and Corporate Tax​

• MSME corporate tax rates will be reduced to:
  • 14% on the first RM150,000 of taxable income
  • 16% on the next RM450,000
• Global Services Hub tax incentives will be enhanced from 1 January 2027, including:
  • A 5% concessionary tax rate
  • Potential extensions of up to 30 years
  • Withholding tax exemptions
  • Stamp duty exemptions for qualifying treasury operations
• Green tax incentives will be extended until 31 December 2030, with qualifying companies eligible for investment tax allowances of up to 100%.
• Full income tax exemption for qualifying Malaysian shipping companies will be extended until the 2036 year of assessment.
• Fixed stamp duties of RM2,000 or RM5,000 will apply to qualifying financing for buying or building Malaysian ships.

Business Financing and SME Support​

• Through the Malaysia Budget 2027, Bank Negara Malaysia will provide an additional RM5 billion financing facility for SMEs affected by the West Asia conflict.
• Business financing guarantees of up to RM32 billion will be available, with the guarantee limit increased to RM50 million.
• Up to RM1 billion in financing guarantees will support local companies undertaking mergers and acquisitions.
• MDEC will receive RM30 million to help 4,000 MSMEs adopt AI and automation.

Employment and Workforce Development​

• Bakat Madani aims to create 30,000 new jobs in 2027 through participation from the private sector, GLICs, PETRONAS and GLCs.
• The Malaysia Budget 2027 will channel more than RM40 million through HRD Corp to train 8,000 workers in elderly care.
• RM3 billion will be channelled through HRD Corp to provide three million skills training opportunities.
• RM8 billion is allocated for TVET programmes across ministries to build a skilled workforce pipeline.
• AI Malaysia Berhad will receive close to RM15 million to support a safe and ethical AI ecosystem and the development of 200,000 skilled AI professionals.
• Infrastructure upgrades at the Chuping Valley Industrial Area and NCER AgriBio Economic Zone are expected to support new jobs and business opportunities.

Employment Opportunities for Expatriate Families​

• From 1 January 2027, spouses of Category I Employment Pass holders who are on dependant passes will be allowed to work in Malaysia, subject to conditions.
• DE Rantau Nomad Pass holders reaching the current two-year limit may receive an additional two-year extension, subject to conditions.

Childcare, Fertility and New Parent Support​

• Malaysia Budget 2027 does not introduce a new federal cash payment for newborns. Support for new parents comes mainly through tax relief and childcare funding.
• Parents can claim up to RM3,000 in tax relief for postnatal care and up to RM1,000 for breastfeeding equipment, under the Health and Well-being relief category.
• GLICs and GLCs will provide a RM100 million matching grant that includes support for childcare and training for 6,000 caregivers.
• RM20 million will be used to upgrade childcare centres at government premises.
• The BuAI programme will offer affordable fertility treatment to 2,000 couples in the public service.

Maternity Leave for the Public Service​

• The Malaysia Budget 2027 clarified that the maximum maternity leave entitlement will remain at 98 days per birth.
• However, the total maternity leave available throughout a public servant’s period of service will increase from 360 days to 490 days.
• This measure applies to the public service and should not be confused with private-sector maternity leave entitlements.
• For private-sector employees, the Employment Act 1955 entitlements of 98 days of maternity leave and 7 days of paternity leave remain unchanged under Budget 2027.

What Should Employers Do Next?​

• With the Malaysia Budget 2027 announcement, employers should now review payroll for employees earning below RM2,000 and confirm whether the MSME exemption applies before June 2027.
• Benchmark graduate and semi-skilled salaries against the planned RM2,500 minimum and track official guidelines.
• Check eligibility for the RM200 per employee MediAsas subsidy and plan premium budgets for 2027.
• Consider PTPTN repayment support as a tax-deductible benefit for repayments made by 31 December 2028.
• Prepare payroll systems for the revised resident tax rates and reliefs from YA 2027 once LHDN releases updated monthly tax deduction (PCB) schedules.
• Brief employees on new reliefs, including postnatal care and caregiving for parents and grandparents.
• Plan work authorisation for eligible expatriate spouses from 1 January 2027.

Stay up to date with the latest labour law, payroll and HR developments across APAC and the Middle East through Links International’s blog and LinkedIn newsletter.

With over 25 years of experience in HR outsourcing, payroll, Employer of Record (EOR) and compliance, Links International supports businesses in managing workforce and employment requirements across multiple markets.

For further information on the Malaysia Budget 2027, “Malaysia MADANI: Reaching for the Skies, While Anchored on Our Values”, please refer to the official Malaysia Ministry of Finance Budget website.

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Frequently Asked Questions on the Malaysia Budget 2027​

• When will Malaysia’s RM2,000 minimum wage take effect?
  The new minimum wage is set to take effect from June 2027, increasing from RM1,700 to RM2,000 per month. Final implementation details should be checked once official guidelines are released.

• What is the new RM2,500 salary requirement for graduates and semi-skilled workers?
  The government plans to introduce a minimum monthly salary of RM2,500 for semi-skilled workers and graduates as part of its wider wage reform framework.

• What EPF changes were announced under the Malaysia Budget 2027?
  All Malaysian citizens will be automatically registered as EPF members at age 18. E-hailing and p-hailing workers will also be eligible for an EPF matching contribution of up to RM600 per year, capped at RM6,000 over a lifetime.

• How will individual income tax change in 2027?
  Resident taxpayers with chargeable income between RM70,001 and RM100,000 will be taxed at 18%, while those between RM100,001 and RM150,000 will be taxed at 24%. The individual tax relief limit will also increase from RM9,000 to RM12,000.

• Can spouses of expatriates work in Malaysia under the new measures?
  From 1 January 2027, spouses of Category I Employment Pass holders who are on dependant passes will be allowed to work in Malaysia, subject to applicable conditions.

• Did maternity leave increase to 98 days under the Malaysia Budget 2027?
  No. The maximum maternity leave entitlement remains at 98 days per birth. For the public service, the total maternity leave available throughout a public servant’s service period will increase from 360 days to 490 days.

• Is there a newborn baby incentive in Malaysia Budget 2027?
  There is no new federal cash payment for newborns. New parents can claim up to RM3,000 in tax relief for postnatal care and up to RM1,000 for breastfeeding equipment, under the Health and Well-being category capped at RM10,000.

• Which businesses are exempt from the RM2,000 minimum wage?
  MSMEs with annual sales below RM50 million are exempt from the RM2,000 minimum wage policy. Employers should confirm the final criteria once official guidelines are issued.

• What tax incentives do employers get under the Malaysia Budget 2027?
  Employers can claim tax deductions for repaying employees’ PTPTN loans between 1 January 2027 and 31 December 2028. Companies in Bakat Madani can claim deductions until 31 December 2030. MSME corporate tax rates also fall to 14% and 16%.

• How much is the MediAsas subsidy for SMEs?
  SMEs with fewer than 75 employees receive RM200 per employee for the first-year MediAsas premium, capped at 50 employees per company.