How take-home pay is calculated in Malaysia (2026)

The salary in an offer letter is not the amount that reaches the bank account. Five statutory deductions sit between the two, each with its own rules. This is how a Malaysian gross salary becomes take-home pay, and what the employer pays on top.

Updated 20 October 2026. Figures verified June 2026 against KWSP, PERKESO, LHDN and HRD Corp guidance. General information, not tax or legal advice.

From gross to net

Take-home pay, or net pay, is gross pay less the employee's statutory deductions. Gross pay is the month's salary plus any allowances, commission and bonus. The employer then deducts the employee's share of EPF, SOCSO, EIS and, where it applies, Lindung 24 Jam (SKBBK), together with PCB, the monthly tax deduction.

  gross pay
  − EPF  (employee share)
  − SOCSO  (employee share)
  − EIS  (employee share)
  − SKBBK  (where it applies)
  − PCB
  ─────────────────────────
  = take-home pay

The five deductions

• EPF is usually the largest deduction. Up to RM20,000 a month the KWSP Third Schedule publishes a ringgit amount per wage band, so the figure is rarely an exact 11% of the wage. Citizens aged 60 and over contribute nothing. See the EPF contribution rates.
• SOCSO comes from a gazetted table of wage bands. Employees aged 60 and over move to Category 2, where only the employer contributes. See the SOCSO contribution table.
• EIS is the smallest deduction. Foreign workers are not covered, and contributions stop at 60. See the EIS contribution rates.
• SKBBK starts with June 2026 wages. It is compulsory for foreign workers and voluntary for Malaysian citizens.
• PCB depends on the tax category, children and reliefs, and is recomputed every month from the year so far. EPF, SOCSO, EIS and SKBBK reduce it through reliefs, so it is worked out last. See how PCB is calculated.

Worked example: RM5,000

A single Malaysian employee aged 30, in PCB Category 1, earning RM5,000 a month with the same salary since January, in January 2026:

Statutory deductions take RM694.50, or about 14% of gross pay, and EPF accounts for most of it. The EPF part is not lost: it is credited to the employee's own KWSP account.

Why net pay drifts through the year

On the same salary, take-home pay changes slightly from month to month, by a few ringgit over the year. PCB spreads the projected annual tax over the remaining months and subtracts what has already been paid, and SOCSO, EIS and SKBBK are relieved only as they are paid, up to RM350 a year, rather than projected ahead. In the example above, PCB is RM109.85 in January and RM108.30 in July 2026, so take-home pay rises to RM4,307.05.

Bonuses

A bonus is added to gross pay for EPF, but bonuses are excluded from wages for SOCSO and EIS. For PCB a bonus is additional remuneration: the tax on it is the difference between the projected annual tax with and without the bonus, charged in full in the month it is paid.

What the employer pays on top

The employer's own EPF, SOCSO and EIS contributions are paid on top of the salary, not deducted from it. For members under 60 the employer EPF share is 13% on wages of RM5,000 or less, and 12% above RM5,000.

Employers registered with HRD Corp also pay a levy of 1% or 0.5% of levyable wages, which is never deducted from the employee. See the HRD Corp levy guide.

What can still change the payslip

• Form TP1 claims, such as reliefs the employee asks the employer to apply during the year, lower PCB.
• Zakat paid through the employer reduces PCB.
• Benefits in kind add to taxable income without adding to cash pay.
• Allowances are treated differently from each other: some count as wages for EPF, SOCSO and EIS, and some are tax-exempt.
• Non-resident employees have PCB deducted at a flat 30%, with no reliefs.