The Malaysia Budget 2026 was unveiled on Friday, 10 October 2025, by Prime Minister Datuk Seri Anwar Ibrahim, totaling RM470 billion. For businesses and HR professionals in Malaysia, here are the essential updates you need to know:
Updates for Local Businesses, Entrepreneurs, Start-ups, and Gig Workers
- A total of RM50 billion will be allocated to support government loan and guarantee facilities aimed at empowering local entrepreneurs.
- The i-Saraan Plus programme, a voluntary Employees Provident Fund (EPF) initiative for self-employed individuals, will be launched to benefit gig, e-hailing, and p-hailing workers, offering matching contribution incentives of up to RM600 per year, or RM6,000 throughout their working lifetime.
Advancing Malaysia’s “AI Nation by 2030” Vision
To accelerate Malaysia’s transformation into an AI-driven economy, the Government has announced a comprehensive package of initiatives, including:
- An allocation of approximately RM5.9 billion for activities related to research, development, commercialisation, and innovation (RDCI),
- An additional 50% tax deduction for micro, small, and medium enterprises (PMKS) on AI-related training expenses,
- The introduction of the Malaysia Digital Acceleration Grant worth RM53 million to support digital innovation and adoption.
Support for Trade and Industry
To cushion the impact of global trade tariff tensions, EXIM Bank will offer soft loans under a RM500 million allocation, ensuring that affected companies can maintain operations and market competitiveness.
Inclusive Workforce Development
The double tax deduction currently available to companies sponsoring training for persons with disabilities will be extended to include companies sponsoring care workers enrolled in training programmes accredited by the Ministry of Women, Family and Community Development (KPWKM).
New Salary Threshold for Employment Contract Stamping
Starting 1 January 2026, the salary threshold for stamping employment contracts with the prescribed duty will be increased from RM300 to RM3,000 per month for employment contracts executed from 1 January 2026. This adjustment ensures better alignment with Malaysia’s evolving wage structure and strengthens regulatory compliance for employers.
Strengthening Technical and Vocational Education and Training (TVET)
To equip Malaysians with in-demand technical skills, the government has allocated RM7.9 billion to enhance and modernise the TVET ecosystem. This investment will improve training infrastructure, industry partnerships, and curriculum relevance – ensuring that graduates are better prepared for high-value and future-ready jobs.
Individual income tax relief – enhancements related to children
Effective for year of assessment (YA) 2026:
- Total tax relief maintained at RM3,000 for childcare fees is maintained, and eligible childcare premises are expanded to include daily care centres or after-school transit centres registered with Department of Social Welfare, for children aged up to 12 years old.
- Individual income tax relief of up to RM1,000 for certain vaccination expenses for self, spouse and child is expanded to include all vaccines registered and approved for use by the National Phamaceutical Regulatory Agency, Ministry of Health.
- Tax relief of up to RM10,000 to cover expenses related to assessment and diagnosis, early intervention programmes, and rehabilitation treatment for children aged 18 years and below with learning disabilities.
- Tax relief of up to RM3,000 for life insurance premiums or takaful contributions for self, husband and wife is expanded to include children, subject to meeting specified conditions.
- Reintroduction of tax relief for Domestic tourism expenses. Payment of entrance fee up to RM1,000 for tourist attractions, cultural and art programmes for YA 2026.
Individual income tax relief for expenditure related to environmental sustainability and home safety
Effective for YAs 2026 and 2027:
Tax relief of up to RM2,500 is currently available for electric charging facilities and food composting machines, and will be expanded to include household food waste grinders and closed-circuit television (CCTV) for home use. The claim is allowed once within two Year of Assessment.
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For further information on Budget 2026: Malaysia Madani, please head over to the official government website: https://belanjawan.mof.gov.my/en/