PETALING JAYA: AFTER Budget 2025 was announced, people have been eagerly going through the details, hoping to find beneficial measures to ease their financial situations.
With various incentives and relief strategies unveiled, here are the major individual income tax reliefs and exemptions that were unveiled by Prime Minister Datuk Seri Anwar Ibrahim on Friday (Oct 18):
| Relief Type | Present Limit | Proposed Limit | Other Proposed Changes | Effective Date |
| Medical Treatment expenses for self, spouse and child | RM10,000 | RM10,000 | It has been clarified that the scope of this relief includes medical costs incurred by the taxpayer under medical insurance plans with co-payment by the insured. The scope of the RM1,000 relief for medical checkup and Covid-19 detection test are expanded to cover fee for a wider range of detection examination conducted at clinic or hospital (such as blood test, ultrasound, mammogram and pap smear), purchase of self-testing medical devices (i.e. glucometer, pulse oximeter, blood pressure monitor and thermometer) and influenza test kits. In respect of assessment and diagnosis for children below 18 years with the learning disabilities, the maximum relief amount is increased from RM4,000 to RM6,000. | Effective from YA 2025 |
| Parents Medical | Up to RM8,000 | Up to RM8,000 | The relief is extended for expenses incurred for grandparents. Cost of vaccination included in the scope of the relief subject to a limit of RM1,000 along with the cost of full medical check-up. | Effective from YA 2025 |
| Elderly Care | --- | RM3,000 (combined limit with child care) | Newly introduced for elderly care of parents or grandparents. | Effective from YA 2025 |
| Education and Medical Insurance (self, spouse and child) | RM3,000 | RM4,000 | --- | Effective from YA 2025 |
| Disabled Person (self) | RM6,000 | RM7,000 | --- | Effective from YA 2025 |
| Disabled Spouse | RM5,000 | RM5,000 | --- | Effective from YA 2025 |
| Deferred Annuity and Private Retirement Scheme (PRS) | RM3,000 | RM3,000 | Period extended for 5 years | Effective YA 2026 to 2030 |
| Net Savings in the National Education Savings Scheme (“SSPN”) | RM8,000 | RM8,000 | Period extended for 3 years, subject to the following additional conditions: i. The tax relief can only be claimed by either parent. ii. Withdrawals from the SSPN fund intended to finance education costs for further studies will not be considered in the calculation of net savings for that particular year and will not affect the eligible amount for tax relief. | Effective YA 2025 to YA 2027 |
| Nursery or Kindergarten Fees | RM3,000 | RM3,000 | Period extended for 3 years | Effective YA 2025 to YA 2027 |
| Sports equipment & activities | Up to RM1,000 | Up to RM1,000 | Scope expanded to cover from “self, spouse and child” to “self, spouse, child and parents”. | Effective from YA 2025 |
| Housing Loan Interest Payment for First Residential Home | N/A | i. RM7,000 if the house price is RM500,000 or below; or
ii. RM5,000 if the house price is above RM500,000 but not exceeding RM750,000 | Tax relief on the interest payments for the first residential home loan (individually or jointly owned). Tax relief on the interest payment is subject to the following conditions: i. The residential home must not be used to generate any income. ii. The sales and purchase agreement must be executed from 1st January 2025 until 31st December 2027. iii. The amount of individual income tax relief on allowable interest payments is applicable for 3 consecutive years of assessment, commencing from the first year the housing loan interest is paid. iv. Two or more individuals are eligible to claim tax relief on housing loan interest for the same residential home based on apportionment of the interest payment. | For Sale & Purchase Agreement (“SPA”) executed from 1st January 2025 to 31st December 2027 |
| Expenses for the Purchase of Domestic Food Waste Composting Machine | N/A | RM2,500 (combined limit with EV charging equipment) | The conditions are: i. The purchase of food waste composting machines for household use. ii. Allowed to be claimed once within 3 years of assessment | Effective YA 2025 to YA 2027 |
Courtesy of Tratax Sdn Bhd. Click here for the full report. Tratax is a consulting company specialising in taxation.
