With RM421 billion allocated, Malaysia’s Budget 2025 aims to ease cost-of-living pressures and improve the quality of life, particularly for lower and middle-income Malaysians.
The announcement has sparked interest among citizens, economists, and policymakers. This budget is seen as a key step towards sustainable growth and development. Curious about what this means for you? Let’s explore the main points of Budget 2025 and their impact on Malaysians.
Subsidies and price controls
- RON95 petrol subsidy will be adjusted to better support lower-income groups, while reducing benefits for the wealthiest 15% of Malaysians.
- Subsidies for health and education are also expected to be adjusted, although further details are yet to provided.
Sales and service tax (SST)
- The SST will be expanded and applied more progressively.
- Basic food items will remain exempt from sales tax while non-essential and premium imported goods, like salmon and avocado will be taxed.
- This may mean that your Sunday café brunches may get pricier.
Tax incentives for individuals
- Personal tax relief: The tax relief for medical and mental health treatments, currently capped at RM1,000, will be increased.
- Personal tax relief: Relief for sports, health, and medical care will be broadened to include more people (dependents) and additional services.
- Disability relief: Relief for individuals with disabilities will increase from RM6,000 to RM7,000. For those with a disabled spouse, the amount will rise from RM5,000 to RM6,000.
- Education and medical insurance relief: Increased relief on premiums from RM3,000 to RM4,000.
- Housing tax relief: First-time homebuyers will benefit from tax relief on housing loan interest payments.
- Dependents relief: Exemption of up to RM3,000 for childcare allowances will be expanded to include elderly care (parents and grandparents).
Tax incentives for employers that will benefit employees
Companies can claim 50% extra tax deduction on the following expenses, which could positively impact individual employees like you.
- Work from home: Employers will receive extra deduction for expenses on flexible work arrangements. This could lead to more companies offering work from home options.
- Caring for a dependent: Companies offering 12 months of extra paid leave for employees caring for children or ill/disabled family members can get a tax deduction. This encourages employers to support their staff with caregiving duties.
- Women returning to work: Employers hiring women returning to work, get the extra deduction on employment costs for 12 months. This helps increase job opportunities for women re-entering the workforce.
Incentives for entrepreneurs
- BNM has established a RM3.8 billion loan fund to help entrepreneurs transition to digitalisation and automation.
- RM50 million in digital matching grants for MSMEs and digital grants for hawkers will be provided to help local entrepreneurs stay competitive in the market.
- RM780 million in business financing has been allocated to support women, youth, and the Indian community.
Cost of living incentives
- The government has boosted funding for cash handouts under schemes like STR and SARA to RM13 billion, which is RM3 billion more than last year.
- The monthly minimum wage will be increased from RM1,500 to RM1,700 starting February 1, 2025.
- The Progressive Wage Policy (PWP) will be fully implemented in June 2024. This voluntary, incentive-based program rewards employees for gaining certified skills, experience, and improving job performance.
Conclusion
In conclusion, Budget 2025 brings significant changes and opportunities for Malaysians. With increased support for digitalisation, higher minimum wages, and targeted financial aid for various communities, the budget aims to improve the quality of life and economic stability for everyone. Whether you’re an entrepreneur, a caregiver, or someone re-entering the workforce, these measures are designed to help you alleviate financial pressures and provide better balance.
