The Malaysia Budget 2026, presented by Prime Minister Datuk Seri Anwar Ibrahim on 10 October 2025, outlines an ambitious plan totaling RM470 billion. For business owners and HR professionals, the budget introduces a range of measures designed to stimulate growth, strengthen workforce capabilities, and enhance national competitiveness.
Below are the main highlights:
Support for Local Businesses, Entrepreneurs, Start-ups, and Gig Workers
To boost Malaysia’s entrepreneurial ecosystem, the Government will allocate RM50 billion to enhance government loan and guarantee facilities for local businesses.
A new initiative, i-Saraan Plus, will also be launched under the Employees Provident Fund (EPF). This voluntary scheme targets self-employed individuals and gig-economy workers, including those in e-hailing and p-hailing sectors. Participants will receive matching contribution incentives of up to RM600 per year, capped at RM6,000 across their working lifetime.
Advancing the “AI Nation by 2030” Vision
To drive Malaysia’s transition toward an AI-powered economy, the Government has announced several strategic investments and incentives:
- RM5.9 billion will be channelled into research, development, commercialisation, and innovation (RDCI) activities.
- Micro, small, and medium enterprises (MSMEs) can claim an additional 50% tax deduction on AI-related training expenses.
- A Malaysia Digital Acceleration Grant worth RM53 million will be introduced to support digital innovation and adoption across industries.
Strengthening Trade and Industrial Resilience
To mitigate the effects of global tariff tensions, EXIM Bank will provide soft loans totaling RM500 million. These funds aim to help affected companies preserve operations, sustain exports, and maintain competitiveness in international markets.
Building a More Inclusive Workforce
The Government will extend the existing double tax deduction – previously granted to employers sponsoring training for persons with disabilities – to now include companies sponsoring care workers attending Ministry of Women, Family and Community Development (KPWKM)-accredited training programmes.
New Salary Threshold for Employment Contract Stamping
Beginning 1 January 2026, the salary threshold for stamping employment contracts will rise from RM300 to RM3,000 per month for contracts executed from that date onward. This adjustment reflects Malaysia’s evolving wage landscape and reinforces proper documentation and regulatory compliance among employers.
Strengthening TVET (Technical and Vocational Education and Training)
To develop a future-ready workforce equipped with technical and industry-relevant skills, the Government has allocated RM7.9 billion to modernise the TVET ecosystem. The funding will improve training infrastructure, enhance industry collaboration, and ensure graduates are prepared for high-value, technology-driven roles.
Individual Income Tax Relief Enhancements – Children and Families
Effective from the Year of Assessment (YA) 2026, the following changes will apply:
- Childcare fees: The existing RM3,000 relief remains, but eligibility expands to include daily care and after-school transit centres registered with the Department of Social Welfare, covering children up to 12 years old.
- Vaccination expenses: Relief of up to RM1,000 for self, spouse, and child now applies to all vaccines registered and approved by the National Pharmaceutical Regulatory Agency (NPRA), Ministry of Health.
- Learning disabilities: A relief of up to RM10,000 is available for assessment, diagnosis, early intervention, and rehabilitation for children aged 18 and below.
- Life insurance/takaful: The RM3,000 relief for self, spouse, or jointly assessed couples is expanded to include children, subject to specific conditions.
- Domestic tourism: The tax relief for domestic tourism expenses returns, with claims of up to RM1,000 for entrance fees to tourist attractions and cultural or art events for YA 2026.
Individual Income Tax Relief – Environmental Sustainability and Home Safety
For YAs 2026 and 2027, the existing RM2,500 tax relief -currently applicable to electric vehicle charging facilities and food composting machines – will now include:
- Household food waste grinders, and
- Closed-circuit television (CCTV) systems for home use.
Taxpayers may claim this relief once within the two-year period.
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For the full Malaysia Madani Budget 2026 details, please head over to the official government website: https://belanjawan.mof.gov.my/en/