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Tax Filing 2026 (YA2025): 3 Tax Relief Mistakes You Must Avoid

Posted LnCoadmin

Under Malaysia’s progressive tax system, tax relief is not just about whether you claim it, but how you claim it.
Without proper planning, taxpayers may miss out on significant and legitimate tax savings.

Below are three common mistakes in YA2025, along with practical strategies to optimize your tax position.

Mistake 1: Missing Updated Tax Reliefs
For Tax Filing 2026 (YA2025), several tax reliefs have been revised.
Failure to stay updated may directly reduce your overall tax savings.

Key updates include:

Personal & Family

  • Disabled spouse: increased from RM5,000 to RM6,000
  • Disabled individual: increased from RM6,000 to RM7,000
  • Disabled child: increased from RM6,000 to RM8,000

Insurance & Medical

  • Education and medical insurance: increased from RM3,000 to RM4,000
  • Medical expenses: up to RM8,000, now extended to include grandparents

Lifestyle & Family

  • Lifestyle relief: RM1,000 (now claimable for parents)
  • Child development expenses: increased from RM4,000 to RM6,000

Housing loan interest relief:

  • Property ≤ RM500,000: up to RM7,000
  • Property ≤ RM750,000: up to RM5,000

Recommendation:
Review all updated reliefs before filing to ensure that every eligible claim is fully utilised.

Mistake 2: Letting the Lower-Income Spouse Claim Reliefs
This is a common mistake among taxpayers.
Malaysia adopts a progressive tax system, where higher income levels are taxed at higher rates.
As a result, the same amount of tax relief provides greater tax savings when claimed by a higher-income earner.

Optimisation strategy:
Where allowed under tax regulations, the higher-income spouse should incur the expense and claim the relief.

Common applicable reliefs include:

  • Medical expenses (self, spouse, children, and parents)
  • Lifestyle expenses (gadgets, books, internet, courses)
  • SSPN / children’s education savings
  • Sports and fitness expenses
  • Insurance (life and medical)
  • Childcare fees
  • Electric vehicle (EV) charging expenses

Mistake 3: Underutilising Tax Relief Limits
Most tax reliefs are subject to annual limits.
Without proper planning, taxpayers may fail to fully utilize these limits, effectively losing potential tax savings.

Optimisation strategy:
For higher-value expenses, consider spreading spending across different tax years to maximize relief utilization.

Common categories include:

Lifestyle Relief (up to RM2,500)

  • Books / e-books
  • Computers, smartphones, tablets
  • Courses / upskilling programmes
  • Internet subscription fees

Sports Relief (up to RM1,000)
(applicable to self, spouse, children, and parents)

  • Sports equipment
  • Competition fees
  • Venue rental
  • Gym memberships
  • Training or coaching programmes