This week on Ringgit & Sense, Jake Lim sits down with Thanneermalai Somasundaram, Managing Director of Thannees Tax Consulting Services to talk about the individual tax reliefs available under Budget 2026, as well as other goodies for the rakyat.
Image Credit: Shutterstock.com
Presenter: Jake Lim
Producer: Jake Lim
Podcast Transcription
Jake Lim:
I'm Jake Lim and this is Ringgit and Sense, the show all about personal finance. With Budget 2026 announced last Friday, the government unveiled a total allocation of RM419.2 billion. That's about 3% higher than last year's budget.
The focus this time seems to be on supporting households, strengthening social protection, and driving Malaysia's transition into a high-value economy. There were no new taxes introduced, but we did see a number of refinements and tweaks for reliefs, especially when it comes to family health and insurance. And joining me this week is Thanneermalai Somasundaram, Managing Director of Thannees Tax Consulting Services.
He's here to help us unpack these tax reliefs for individuals and also other goodies announced in the budget for us rakyat. Thank you very much for joining me today, Mr Thannee. It's great to have you back on the show.
So to just kick things off, could you walk us through the key tax reliefs available for individuals under Budget 2026?
Thanneermalai:
As far as individuals are concerned, I think the target of this government has always been, if you think about it, this year, last year and all, is actually helping the bottom, the B40. And now they're focussing on the M40, which is actually very welcome. Because we're feeling the squeeze, right? Because we're the ones who pay the tax.
We pay the tax and then we also are being squeezed. Because if you think about it, the B40 are actually net recipients. But the M40, it neutralises because they are paying tax on one side.
They're having to pay all these additional costs which will flow through from the SST increase, expansion, the e-invoicing. Everything will finally flow to the M40 because they're the ones who are really buying many of these services and goods. But on the other side, they're now being given some relief, but not much, really not much.
So it's the M40 who really are the contributing people to the nation and building. And the M40 will become the T20 or the T15 because nowadays there are so many Ts. I also don't fully understand that.
So at the end of the day, that's it. But this budget really didn't give away too much in terms of individuals, for the individuals. There's only a few, five or six of them which I'll briefly mention.
These two, yeah. But more importantly, they gave away in money. The cash handouts, the cash transfers are huge if you think about it.
If you just look around, and I'll just quickly mention the kind of huge numbers. If you took the STR. The Sumbangan Tunai Rahmah.
The Sumbangan Tunai Rahmah. RM15 billion has been set aside. Then RM100, remember all of us have been getting this year.
That's right, everyone qualified for it. That cost RM2.2 billion this year. Next year is going to cost you a similar amount.
And that's also going to be given to everyone. Every Malaysian citizen will actually receive it. And then OKU allowances are RM1.4 billion.
And if you look at that, the TVET programme also costs us about RM1.3 billion. These are the billion-dollar numbers. There are many, many other aid that have been given to all sections of society, from fishermen to paddy farmers, to everybody else.
Even to get rid of your old 20-year-old car, they give you an RM4,000 loan. So those are the main things. But coming back to that, the main tax measures that have been announced here is really now vaccination.
Previously, it was only limited to certain types of vaccination. But now you can spend RM1,000 within the RM10,000 medical. Remember, you are entitled to medical relief.
But there's no extra. It's just now you're given RM1,000. But the vaccination can be any.
So if you've got, for example, somebody like me who is a much older person who is in the 70s, then chikungunya is a problem to us. So if I went and took that injection for about RM900 odd, then I can now get it. So you can now, the vaccination list has been expanded to include practically everything.
Every vaccination, flu vaccination, everything. So that's one that has been given. Childcare, no change.
The RM3,000 that you spend on childcare relief, only thing is now the child, instead of under six years, it's now been expanded to 12 years. And then now the early intervention and rehabilitation of children with problems, like ADHD, and you have autism.
Jake Lim: Yeah, you can get them diagnosed, right?
Thanneermalai:
And previously, it was already there. And now it's even expanded further that you can now increase it from RM6,000 to RM10,000. But that's not additional.
It's inside the RM10,000 medical relief. And then insurance premium previously for medical, for life, and for your education, life, and medical was only for the husband and wife. Now it's including the children.
So that's the other one.
Jake Lim:
I have a question here, actually, when it comes to your insurance, right? Because if I'm not mistaken, EPF contributors can now use their savings, right, to get insurance coverage.
Thanneermalai:
No, it's very easy, actually, because all you do is, EPF is one of the friendliest organisations.
If you ever need to use it, you can go in there and apply for it. And always there's a form, whether you're contributing an extra RM100,000, or whether you're withdrawing for your house, whether you're withdrawing for your health. And I found, and I find, I don't know, in Kuala Lumpur, at least at the headquarters and all that, I find that extremely efficient.
Jake Lim: Quite straightforward, it sounds like.
Thanneermalai: Very, very straightforward. And they actually assist you. EPF is one of the friendliest organisations.
Jake Lim: So you touched on the new reliefs just now, but if we look back at last year's measures, most of the existing reliefs are still in place, right?
Thanneermalai:
All the other reliefs are still there.
Your lifestyle relief, your sports relief of RM1,000, a lifestyle relief of RM2,500 is there, the RM9,000 is there. If your wife is not working and your husband is not working, if you do a combined assessment, you get the RM4,000.
So I think at the end of the day, none of these reliefs have really been changed. For example, your child at RM2,000, if they're in tertiary education, RM8,000. If you have a disabled child, you get RM6,000.
Plus if the child is in, if the child was also, the disabled child was in tertiary education, he gets another RM8,000, so RM14,000 for that child. And then SSPN also, you can get your RM8,000, but it's only RM8,000 for the whole family. So if you think about the medical expenses, RM10,000.
The medical expenses, you got to look at it and where, vaccination for medical, for your medical checkup, everything is RM10,000. And also now you have intervention with all these problematic issues. Pity the families like the autism, the ADHD or something, and then this RM10,000 includes serious illnesses, from Parkinson's to cancer, renal failure, leukaemia, many other problems.
They have a whole list of it. And then mental is also, mental issues are also included.
So those are the kind of things around. So, and then you have the PRS RM3,000. Then EPF, you can contribute up to RM7,000.
If you think about it, RM4,000 and RM3,000. If you've got not enough, you can still top up, or you can have insurance of RM4,000. And then in terms of electric vehicles also, remember the EV charging.
Then they've included, remember, there is also in the past, the breastfeeding equipment. That's also you're given relief on.
And you're also given, the new relief is actually now, the other one is tourism, where you're supposed to go, and if you spend RM1,000 entering Legoland or any other land, whatever, these local tourism sites for entrance fees, et cetera. No more hotels.
No more hotels. Previously, they gave you for hotel accommodation. But this is more of... Only for those local domestic sites. For domestic sites, they gave you that.
Jake Lim: It seems like it's in advance, in anticipation of Visit Malaysia Year 2026, right?
Thanneermalai:
You see, tourism, Jake, is one of the easiest ways in which actually the country will benefit without incurring a lot of expenditure. Because we are only bringing in the foreign tourists and local tourists to see what is already there.
So you're not incurring major expenditure like putting up a billion-dollar factory to produce, you don't know. This one, you're actually coming in here. It's the easiest way of actually earning good revenue for the country and with very little expenditure.
So if you think about it, the profit to the country is significant. The effect to the country is huge. And we need to promote the right kind of tourism.
And if you do the right kind of tourism, I'm not talking about like other countries' flesh tourism. We're talking about decent tourism. And they come in here, they want to shop, they want to enjoy the weather, they want to enjoy the air or the seaside or snorkelling or diving or whatever.
We've got so much to offer ecologically, everything.
Jake Lim:
Can we also talk about the other aid programmes or initiatives or schemes that the government has announced? For example, I think there's this eKasih scheme where qualifying families can receive RM2,400 a year.
Thanneermalai:
The only thing is the bureaucracy should help us.
I don't want to hit the bureaucracy, but I think the bureaucracy can help us educate where this cash is, not just the STR, not just the RM100 and all that, which is automatically coming into our areas like the RM100 comes into our IC, then the STR, you've got to go and claim it. It should be available. But, you know, you've got for the gig workers, for example, to the EPF up to RM600 a year, 20% annual individual contribution.
So, the government also contributes. You also contribute. There are limitations like RM450, RM600.
There are many, many areas where money is available. You should know how to go and use it and how to go and actually obtain that. So that's something like, for example, the eKasih programme.
There could be 1 million STR, those who are receiving STR, to receive assistance of RM200 a month. So they'll be getting as part of STR 200. RM2,400 annually.
Then you have a household earning less than RM2,500 with five children. You can get a maximum of RM4,600. So the STR will be RM2,200 and SARA will be RM2,400.
And for single persons, they get RM600. So you're getting quite a few. And then, of course, the biggest thing that has been given by the government, although its amount is small, you will think individually, but it's very large.
It's a subsidy. The petrol subsidy, the RON subsidy, not so much the diesel. Diesel is more the commercial.
But it passes on to the individuals. But more important is the RM1.99. The RM2.05, the RON 95 became RM1.99.
Jake Lim: It's available to everyone.
Thanneermalai:
Correct, yeah. So that's also helpful.
The only thing is you cannot use 300 litres of petrol. Even if you are in the M40, unless you are travelling from Seremban or Segamat to come to Kuala Lumpur every day, then you'll use.
But if you happen to live within Kuala Lumpur, 300 litres is more than enough. Or if you live in Penang, it's more than enough. So I think the government has been more than, far more generous than it should be.
300 is a lot. And I don't know whether RM1.99 is a good thing to give people a little bit less. But RM2.05 to RM1.99, to be very honest, the government could have used that money somewhere else.
Not, to me, they could have kept it at RM1.05. But that's the government's decision. Maybe it's all part of.
You mustn't forget there's a political element to this. I mean, elections may come in a year or a year and a half or two years. But this is a feel-good thing.
Jake Lim:
So, the government's debt services charges under Budget 2026 is projected to reach about RM58.3 billion in 2026. That's up about 7% from last year. What are your thoughts on the fiscal space for our government to spend?
Thanneermalai:
So, in very simple terms, just like I'm telling an individual to save money, the government also needs to actually find capital because we are running a deficit budget.
Effectively, in simple terms, to an ordinary man, you're spending more than what you earn. You can't carry on life like that all the time. I mean, you can do that, but there's only a limitation to what you can do.
So, in the long run, you've got to think about being self-sufficient, generating, running possibly a budget surplus. And I don't know when we will achieve that. We've only done it one or two years in the past.
In my 45 years of working here in Malaysia in tax, I've only seen it one or two years where we run a surplus. And our growth also has to go up. You can't be at 4%.
We really have to go back to the days where at 5.5% to 7%. That's when the country will be robust and we are capable of doing it. But we all need to get back to... I'm just concerned about all these bantuans.
The messaging is, wherever possible, we must remove the number of people who are receiving that.
Jake Lim: Elevate them, right?
Thanneermalai:
No, we should elevate them, get them out of the bracket so that we reduce this contribution so that people actually are self-sufficient. I'm not saying don't give.
Single mothers, people who are in trouble, a lot of things have to be given. Like, for example, this time around, they're even giving you legal aid for mothers who are actually in court defending their position because child custody is an issue, they've got marriage-divorce issues, so legal aid will be given by government to defend these people. Otherwise, they may not get justice.
So those are the kind of issues which I think is welcome.
Jake Lim: And what are your thoughts on the government's priorities when it comes to allocations under their budget?
Thanneermalai:
We're spending a huge amount on education. This budget has allocated RM81 billion.
A lot of people, I'm not the specialist in education, a lot of people are actually questioning the quality we get out of the output. We spend RM81 billion. What's the output we are getting? And are they hungry? Are they wanting to learn? Do they want to do things? But instead, we are encouraging everybody to pay RM3,000, pay RM3,500, pay RM4,000 and all that.
But they have to earn it. I believe they have to earn it. You can't just give it away to people who just come in there and say they deserve it.
Why should somebody just entirely... There must be productivity linked to whatever you are giving. Pay increases should be linked to productivity. So that's very important.
But the vehicle scrapping scheme is also good because they're giving you now RM4,000 if your car is more than 20 years old.
Jake Lim: This is a new one, isn't it?
Thanneermalai:
Yeah, a new one. What we do is now, if your car is 20 years old, more than 20 years old, you will get RM4,000 to buy another car.
So basically, you're buying a car to replace your car. They want the old cars to be scrapped over 20 years. The other thing that is, is the rich and famous have actually been enjoying this exemption bringing in luxury cars that's valued more than RM300,000 through Langkawi and Labuan.
Now they're saying, hey, we'll only give this for cars who really are running in Labuan. They didn't say that, but effectively they're limited to RM300,000. So you can't bring a Rolls-Royce and claim that you are... I mean, most of those, many of those Rolls-Royces, if you think about it, they would have come through Langkawi or probably more Langkawi than Labuan.
It'll be more Langkawi. So Langkawi was used, and it was a known conduit. It took a long time to put a stop to this.
So who benefited? Extreme rich. The Maseratis or something and all that would have come through. So those leakages have been plugged. That leakage has been plugged. That's the other one.
And they've been giving a lot of subsidies to the farmers, the paddy farmers, the fishermen and all that. Then the other one that they've actually given is... So those are all helpful. Those are all helpful.
In that sense, it has been helpful. But there are a lot of other things that will come indirectly because now they're giving aid to individuals. Because remember, the smallholders are all individuals.
So they've been giving aid to them also. And elderly folk also.
There's allocation of welfare funds for the old folks to be used for socioeconomic and allowance and activity centres. So they actually allocated RM1.2 billion for that, so if you think about it.
And they're giving matching grants. Remember i-Suri, for the housewives who are not working? Yes. You can also contribute up to RM600. So there's a 15% matching in this amount, up to, and they get a small amount of money.
So that's i-Suri. That's continued. So there's a number of... a lot of other things also in terms of another RM500 a year or RM5,000 for life, for the life.
A total RM5,000 in a lifetime in matching contribution for informal workers and self-employed workers under i-Saraan. So if you go to EPF, there is i-Saraan, there's i-Suri, there's all sorts of "i"s left. So you can check it out and see if you can actually benefit from that.
And the civil servants, below grade 56, every year they get something in the budget, but those below 56 now will be given RM500 and even pensioners will be given RM250. So if you think about it, they're all getting it. So there are lots of places where money is actually being given.
Jake Lim: Yeah, it seems like there's a lot of initiatives, cash handouts.
Thanneermalai:
More so in direct transfers. And it's welcome.
The only thing is the people who receive it, I hope they will be grateful and actually make it productive and not sit there and wait and say, oh, next year, okay, I'll get it again. So then that initiative, that hunger to move up is lost.
So that's somewhere, this budget is excellent and these previous budgets were also along the same lines, but I think we've got to change the thinking of the people who receive this money. You carry on receiving it, but we want you to move out of these brackets. We really want this nation to move upwards, not sideways.
That's my thinking on this. But it's got to be a long-term move. That's when everyone will work along the same.
And I think it should be always linked. Everything should be measured back to productivity. If you give money, what are you going to get from it? What are you doing? How will you benefit personally? Of course, you will get the money.
But on the other side, what will you give back to the country for receiving this money? Even if you get back, even if you're able to actually save time and take care of your children, that's a contribution to the economy. If you're, for example, getting money and then you actually use it to learn something and then to come up in your life, then you contribute to the economy. So everything has to be actually back to, I'm sorry, it's like a profit and loss account.
So you have to look at it in terms of, you receive something, the nation needs to get it back in the form, not so much in cash, maybe goodwill, cash, your behaviour, everything. So the pluses will be in excess of the minuses. So at the end of the day, there's a net contribution to the country.
I may be very clinical on this, but the DNA of this whole country has been driven towards hunger to improve ourselves.