Prime Minister and Minister of Finance Dato Seri Anwar Ibrahim tabled a record-breaking RM459.8 billion national budget in Parliament on Friday, combining expanded social safety nets and tax cuts for middle-income households with a continued commitment to fiscal discipline.
Now the fifth national budget tabled under the Madani administration, Budget 2027 projects a further reduction in the national fiscal deficit to 3.3% of Gross Domestic Product (GDP), relying on targeted spending, structural economic reforms, and steady revenue collection to cushion domestic households against economic pressures.
(Note that the announcements mentioned in this article are non-exhaustive – you can read them in full through MoF’s Belanjawan microsite.)
Budget 2027 Highlights
Direct Cash Assistance & Social Safety Nets
To address living costs across income tiers, direct financial aid allocations under Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) have expanded to a total pool of RM16 billion. Under the updated framework, all STR recipients will receive monthly SARA aid of up to RM150 per month, bringing total support to as much as RM1,800 annually.
In addition to targeted aid, the government is extending support to the broader population through a universal boost. Adult Malaysians aged 18 and above who do not receive STR – including those in the middle-income M40 group – will receive two one-off RM100 SARA MADANI payments distributed prior to Aidilfitri and Merdeka Day.
Essential utility and fuel subsidies are also being restructured to protect essential usage. The monthly electricity subsidy protection threshold for domestic users expands from 600 kWh to 800 kWh, safeguarding an estimated 90% of households from tariff hikes. Simultaneously, monthly fuel quotas under the BUDI95 and BUDI Diesel programs are set at 300 liters and 400 liters, respectively, for all eligible recipients.
Minimum Wage Hiked To RM2,000
In a direct push to raise baseline earnings across the workforce, the national minimum wage will increase from RM1,700 to RM2,000 per month starting June 2027. Micro, small, and medium enterprises (MSMEs) with annual revenues below RM50 million will receive a temporary exemption to help ease transition costs and mitigate immediate wage pressures.
Beyond the minimum wage floor, the government is establishing progressive earnings targets across skill levels. A new minimum starting salary benchmark of RM2,500 per month has been set for semi-skilled workers and fresh graduates. Government-linked companies (GLCs) and government-linked investment companies (GLICs) are expected to lead by example, setting their internal living wage benchmark at RM3,400 per month.
Income Tax Reforms & Extended Reliefs
Broad financial relief is scheduled for approximately five million taxpayers following key structural adjustments to individual income tax thresholds. The basic individual tax relief rises from RM9,000 to RM12,000, marking the first upward revision to the baseline relief structure since 2010.
Tax rates for middle-income brackets are simultaneously dropping by 1 percentage point, lowering the RM70,000–RM100,000 bracket to 18% and the RM100,000–RM150,000 bracket to 24%. High-income earners generating over RM1 million annually will see their top rate adjusted to 30%.
Taxpayers will also benefit from an expanded scope of claimable personal deductions. Deductions now encompass postnatal care, broader caregiving expenses for parents and grandparents, AI software subscriptions, routine vaccinations, and shelter pet adoption fees.
Business Support & Technological Advancement
To support small enterprise growth and buffer businesses against international market volatility, microfinancing allocations are increasing to RM6.6 billion, backed by an additional RM5 billion in Bank Negara Malaysia financing facilities. Total loan guarantee capacity under the SJPP and CGC programs has also been expanded to RM57 billion to facilitate easier access to commercial credit.
On the technological front, AI Malaysia Bhd receives RM15 million to establish national safety and governance standards, anchoring a broader strategic effort to upskill 200,000 workers in artificial intelligence technologies. Administrative costs for everyday banking are also slated to decrease, with full stamp duty exemptions taking effect on all new savings and current account openings starting January 1, 2027.
Pokdepinion: Raising basic tax relief to RM12,000 and bumping the minimum wage to RM2,000 gives everyday Malaysians a long-overdue breather, but the budget’s real success hinges on whether small businesses can survive the rising cost of operations.
