Malaysia: MTD Calculations Changes for 2026

The following key changes in the tax reliefs effective from 01 January 2026 has been passed in the Finance Bill 2025 and included in the MTD specifications for 2026:

Expansion of Tax Relief for Medical Treatment Expenses – Vaccination Expenses

Current Provision

Tax relief up to RM1,000 is available for vaccination expenses for self, spouse, or children for the following vaccines: Pneumococcal, HPV, Influenza, Rotavirus, Varicella, Meningococcal, Tdap, and COVID-19.

Changes for 2026

Individual income tax relief for vaccinations now covers all types of vaccines registered and approved by the National Pharmaceutical Regulatory Agency (NPRA), Ministry of Health. The approved vaccine list is available on the official NPRA website.

Expansion of Tax Relief on Medical Treatment, Special Needs and Carer Expenses for Parents / Grandparents

Current Provision

Tax relief for a full medical check-up, including any vaccination, for parents/grandparents is allowed up to RM1,000, without requiring Ministry registration/approval.

Changes for 2026

To promote disease prevention and vaccination, expanded individual income tax relief for vaccines to cover all types registered and approved by the NPRA, Ministry of Health.

Review of Tax Relief for Child Care Fees Paid to Registered Child Care Centres / Kindergartens for a Child Aged 6 Years and Below

Current Provision

Individual income tax relief of up to RM2,000 is available for fees paid for childcare of children up to 6 years old at registered Childcare Centres (JKM) or Kindergartens (KPM).

An additional, temporary RM1,000 tax relief was made available from the year of assessment 2020 to 2027. Either parent may claim both reliefs.

Changes for 2026

To support working parents, following changes have been made to the individual income tax relief:

• The time-bound RM1,000 relief has been made permanent and combined with the existing RM2,000 relief, totaling RM3,000 claimable tax relief.
• Eligible premises have been expanded to include daily care or after-school transit centers registered with the Department of Social Welfare (JKM) for children up to 12 years old.

Review of Tax Relief for Premium of Life, Education and Medical Insurances

Current Provision

Individual income tax relief is provided as follows:

• Life insurance premiums or takaful contributions (self, spouse) up to RM3,000.
• Education and medical insurance premiums (self, spouse, children) up to RM4,000.

Changes for 2026

Expansion of the RM3,000 individual income tax relief for life insurance/takaful contributions (for self, husband/wife) to include children.

Eligibility for insured children’s relief (life, education, and medical insurance/takaful) is:

• Unmarried, under 18; or
• Unmarried, 18+, pursuing tertiary education or other conditions prescribed; or
• Unmarried disabled children (no age limit).

Increase Tax Relief for Medical Treatment Expenses on Early Intervention Programmes or Rehabilitation Treatment for Children with Learning Disabilities

Current Provision

Tax relief for individual income is limited to RM6,000 for medical treatment expenses for self, spouse, or children. This includes diagnostic examinations, early intervention, and continuous rehabilitation for children with learning disabilities aged 18 and below.

Changes for 2026

The individual income tax relief limit for diagnostic examinations, early intervention, and rehabilitation treatment expenses for children under 18 with learning disabilities (including autism, ADHD, GDD, intellectual disability, Down syndrome, and specific learning disabilities) is increased from RM6,000 to RM10,000. The aim is to continue supporting early intervention programmes and rehabilitation treatment for children with learning disabilities,

Expansion on Individual Income Tax Relief for Expenses on Admission Fees to Tourist Centres and Cultural Programmes

Current Provision:

From 2020 to 2022, individuals could claim up to RM1,000 in income tax relief for domestic tourism expenses, including: i. MOTAC-registered accommodation fees; ii. admission to tourist attractions; and iii. domestic tourism packages purchased via MOTAC-licensed travel agents..

Changes for 2026:

Proposed tax relief of up to RM1,000 for admission fees to tourist attractions (museums, theme parks, national/marine/wildlife parks, zoos, geoparks) and cultural/arts programmes.

Expansion of Tax Relief for Income Tax Relief for Environmental Sustainability and Home Safety-Related Expenditure

Current Provision

Individuals can claim income tax relief up to RM2,500 for environmental sustainability expenses. This includes:

• EV charging facility costs (purchase, rental, installation, or subscription) from the 2022 to 2027 assessment years.
• Purchase of a household food composting machine, claimable once every three years from the 2025 to 2027 assessment years.

Changes for 2026

To encourage sustainable and safe living, the existing income tax relief (up to RM2,500) has been expanded to also cover the following:

• Household food waste grinders and
• Home-use Closed-Circuit Television (CCTV). The tax relief for food waste grinders and/or CCTV can be claimed once every two years of assessment.

The above relief can be taken once in 2 years and is applicable for Year of Assessment 2026 and 2027.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change

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Malaysia – Monthly Tax Deduction (MTD) Calculations Changes – 2026

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