How Malaysians Can Unlock Maximum Tax Savings Through Insurance
Paying taxes is part of life, but did you know your insurance could help lower your income tax? Every year, thousands of Malaysians miss out on valuable savings simply because they’re unaware of this benefit. This guide will show you how to claim tax rebates while enjoying the insurance protection.
When you pay premiums for life or medical insurance, you’re entitled to tax relief. This reduces your taxable income, which means you’ll pay less in taxes overall.
Learn how to make your insurance work harder for you and boost your savings this year.
What is Income Tax Relief for Insurance?
Tax relief is a deduction allowed by the government, which reduces the amount of income subject to taxation. It's a reward for making wise financial decisions that protect you and your family.
Why does this matter?
Insurance tax relief is part of Malaysia's personal tax benefits. The Inland Revenue Board (LHDN) created these tax rebates to encourage financial planning. When you protect yourself with insurance, the government gives you a tax relief.
According to LHDN's official guidelines, insurance premiums qualify for tax deductions. This applies to policies you buy for yourself, your spouse, or your children.
The system is straightforward. You pay your insurance premiums throughout the year. Then, when filing your annual tax return, you are entitled to a tax relief on these payments. The relief automatically lowers your taxable income.
It's a win-win situation. You get protection and tax savings.
What Counts as Insurance for Tax Relief
Not all insurance policies qualify for tax relief. LHDN has specific rules about which premiums you can claim.
Life Insurance and EPF (Limit RM7,000)
You can claim up to RM7,000 combined for:
- Life insurance premiums
- EPF (Employees Provident Fund) contributions
- Annuity scheme premiums
- Private Retirement Scheme (PRS) contributions
This category covers policies that provide death or disability benefits. Term life insurance and whole life insurance both qualify. The RM7,000 limit applies to the total of all these contributions together.
For example, if your EPF deduction is RM5,000 yearly, you can still claim RM2,000 more for life insurance premiums.
Medical or Education Insurance (Limit RM4,000)
Healthcare costs keep rising. Education expenses never get cheaper. That's why these insurance policies qualify for tax relief.
Income tax relief for payments made on education and medical insurance premiums increased to RM4,000 in Budget 2025.
What qualifies:
- Medical insurance premiums for yourself
- Medical insurance for your spouse or children
- Education insurance policies
- Medical takaful contributions
Only Approved Policies by LHDN Qualify
LHDN only accepts policies from license insurers in Malaysia. Your insurance company must be registered with Bank Negara Malaysia. Always check your policy documents and verify that your policy qualifies before claiming.
Source:
How to Claim Insurance Tax Relief
Claiming insurance tax relief is simpler than most people think. Just follow this straightforward process and you'll be done in no time.
Who Needs to File Income Tax?
Tax filing applies to individuals who fall within specific income or registration categories. You are generally required to file if:
- Your annual salary exceeds RM37,333 (about RM3,111 monthly after EPF contributions).
- You earn through self-employment, freelance work, or digital platforms and meet the taxable income level.
- You own or manage a business that generates profit within Malaysia.
- You hold a tax reference number issued by the Inland Revenue Board of Malaysia (LHDNM), even if your income is irregular or below the taxable range.
To determine your eligibility, use the official LHDNM income tax calculator.
Essential Documents You'll Need
Before starting your e-Filing, gather these important documents:
| Document Type |
What You Need |
| Insurance Receipts |
Premium payment receipts and tax certificates from your insurer |
| EPF Statements |
Contribution statements from your employer or KWSP |
| Policy Documents |
Your insurance policy schedule or certificate |
| Income Records |
EA form (salaried) or income statements (self-employed) |
Important: Keep all receipts and statements for at least 7 years. LHDN may request them during audits.
Step-by-Step Guide to e-Filing Your Income Tax in Malaysia
Step 1: Register for a Tax File Number (First-Time Filers)
If you’ve never filed taxes before:
- Visit mytax.hasil.gov.my.
- Go to the e-Daftar service to register as a new taxpayer.
- Complete the online form using your MyKad and required details.
- Submit your application and follow the instructions for identity verification.
- Once approved, you’ll receive your Income Tax Number and can log in immediately using the provided credentials.
Note: Approval time may vary based on verification. The previous “within 7 days” timeline is no longer stated.
Step 2: Log in to the MyTax e-Filing System
After registration:
- Visit mytax.hasil.gov.my.
- Log in with your MyKad number and password.
- Select “e-Filing.”
- Choose the correct Assessment Year (YA 2025) for income earned in 2025.
Step 3: Declare Your Income
The system will guide you through these income types:
- Employment income: Salary, bonuses, commissions.
- Business income: For self-employed or freelance earners.
- Rental income: If you earn property rentals.
- Other income: Dividends, interest, or royalties.
Use your EA Form to key in accurate salary and EPF contribution details.
Step 4: Claim Your Tax Reliefs
Enter each claim under the correct relief category. Below are key reliefs and their latest limits:
| Relief Category |
What to Claim |
Maximum Limit
(YA 2024) |
| Life Insurance |
Life insurance or takaful contributions (for private sector) |
RM3,000 |
| EPF Contributions |
Mandatory and voluntary EPF contributions |
RM4,000 |
| Medical & Education Insurance |
Medical card premiums, critical illness, and education insurance |
RM3,000 |
| Parents’ Medical Expenses |
Includes treatment, dental care, and medical check-ups (RM1,000 sub-limit for check-ups) |
RM8,000 |
| Lifestyle Relief |
Books, computer, smartphone, internet subscription, etc. |
RM2,500 |
| Sports Equipment & Activities |
Equipment, gym membership, and participation fees |
RM1,000 |
The e-Filing system automatically prevents you from exceeding the allowed claim limits.
Step 5: Review and Submit
Before submission:
- Verify that all income and relief entries are correct.
- Confirm that all receipts and supporting documents match your claims.
- Review your final tax calculation to see whether you need to pay or will receive a refund.
Click Submit when ready. You’ll receive an instant confirmation receipt for your records.
Important Deadlines to Remember
| Filing Method |
Deadline |
| Manual Filing (Paper forms) |
30 April |
| e-Filing (Online) |
15 May |
Pro Tip: Don't wait until the last minute. File early to avoid technical issues and get refunds faster. Missing the deadline means penalties and potential fines. Mark your calendar now to avoid rushing.
How Do I Pay My Income Tax?
After filing, you might owe additional tax or be eligible for a refund. LHDN provides several convenient ways to pay.
Payment Methods Available
- FPX (Financial Process Exchange): Pay directly from your bank account online.
- Internet banking: Through your bank’s website or app.
- Partner banks or Post Office branches: Over-the-counter payments are limited to designated agents and usually require a Bill Number. LHDN no longer accepts cheques or money orders at its counters.
- Credit/debit card: Via the MyTax portal or Revenue Management Centres. Service charges are fully borne by the government.
Online methods remain the fastest and most convenient.
Understanding Your Tax Bill
Tax relief reduces your taxable income before LHDN calculates your final tax.
Example (YA 2024):
- Gross income: RM50,000
- Insurance + EPF relief claimed: RM7,000 (Life insurance RM3,000 + EPF RM4,000)
- Taxable income: RM43,000
- Tax calculated on: RM43,000 only
Your Monthly Tax Deduction (MTD) from salary already covers part of your tax. The final payment settles any remaining balance.
If you claimed more relief than expected, you might get a refund. LHDN credits this directly to your bank account within 30 days.
Source:
Who Can Claim Insurance Tax Relief?
Not everyone is eligible for insurance tax relief. To qualify, you must be a Malaysian tax resident, which typically means residing in Malaysia for at least 182 days within a calendar year.
Requirements:
- Valid Malaysian tax file number
- Taxable income that requires filing
- Insurance policies in your own name
- Premium payments made during the tax year
Your insurance must be from approved Malaysian providers. Foreign insurance policies typically don't qualify.
Joint vs Separate Filing for Spouses
Married couples in Malaysia can file their taxes jointly or separately. In a joint assessment, both incomes are combined, but only one spouse can claim the insurance tax relief within the usual limit. In a separate assessment, each spouse files their own return and can claim their own insurance relief—often leading to greater overall savings.
Source:
Tips to Maximise Insurance Tax Relief
1. Choose eligible policies (life + medical)
Select policies that qualify for tax relief, such as life, EPF, and medical insurance. Combining them helps you claim up to RM11,000 in total relief.
2. Avoid double-claiming the same policy
Each insurance premium can only be claimed once. Don’t claim the same medical plan under multiple categories or for both spouses.
3. Keep yearly statements organised
Store your insurance and EPF statements in one folder—digital or physical. Keep receipts for seven years to make tax filing easier and stress-free.
Maximise Your Savings with Insurance Tax Relief
Insurance tax relief isn’t just about saving money—it’s about securing your future wisely. By claiming eligible insurance policies, you can reduce your taxable income while ensuring financial protection for yourself and your loved ones. You may claim up to RM11,000 in combined reliefs for life, medical, and education insurance.
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Critical Illness Protection
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