The Inland Revenue Board of Malaysia (LHDN) has introduced significant changes to Form B for Year of Assessment 2025. These are not minor tweaks — they change how your tax is computed, what reliefs you can claim, and how the form itself is structured.
We've gone through the YA 2025 form, compared it against YA 2024, and reviewed the Explanatory Notes. Here's a clear breakdown of what changed and what it means for you.
This is the biggest change. Malaysia now taxes dividend income for individual taxpayers.
How it works:
📢 New 2% Dividend Tax in Malaysia: What You Need to Know!Starting from the Year of Assessment 2025, a new 2% tax will apply to individual dividend income exceeding RM100,000 per year. This applies to both listed and unlisted Malaysian shares. 📈
The key facts:✅ Only the portion of dividends exceeding RM100,000 is subject to this tax.✅ It is calculated based on a specific formula relative to your total taxable income.✅ Exemptions: Good news! Dividends from EPF (KWSP), ASNB, LTAT, and foreign sources are
NOT included in this tax. 💰
• A new item B8 has been added specifically for statutory dividend income.
Who is affected:
• Business owners holding shares in private companies
• Directors receiving dividend payments
• Shareholders of listed companies
• Joint assessment cases where a spouse earns dividend income
For joint assessment, there are two new items — B22a (spouse's statutory dividend income) and B22b (spouse's aggregate income). These must be filled in correctly.
What you should do:If your dividend income in 2025 may exceed RM100,000, let us know early. We'll help you plan the computation and avoid errors.
2. New First Home Tax Relief (Item H22 — New)
YA 2025 introduces a new tax relief for individuals buying their first residential property.
Conditions:
•The Sale & Purchase Agreement must be signed between 1 January 2025 and 31 December 2027.
•The property must be your first residential property.
•It must be owner-occupied — you cannot rent it out.
•Limited to one unit only.
Relief amounts:
Property Price | Annual Relief Limit | Max Over 3 Years |
≤ RM500,000 | RM7,000 per year | RM21,000 |
RM500,001 – RM750,000 | RM5,000 per year | RM15,000 |
The relief applies for 3 consecutive years starting from the year you first pay interest on the loan. You cannot choose which years to claim — it starts automatically from the first year of interest payment.
What you should do:If you're buying your first home in 2025–2027, keep all loan documents and interest statements. Tell us about the purchase so we can include this relief in your filing.
3. Higher Personal Tax Reliefs
Several existing reliefs have been increased for YA 2025:
Relief Item | YA 2024 | YA 2025 | Increase |
Disabled individual (H4) | RM6,000 | RM7,000 | +RM1,000 |
Disabled spouse (H15) | RM5,000 | RM6,000 | +RM1,000 |
Disabled child max (H16c) | RM14,000 | RM16,000 | +RM2,000 |
Education & medical insurance (H19) | RM3,000 | RM4,000 | +RM1,000 |
These are straightforward increases. If you or your family members qualify, you get a bigger deduction this year.
[Insert Image 3: Relief Changes Table]
4. Expanded Medical and Lifestyle Reliefs
YA 2025 broadens the scope of several reliefs:
Parents' and grandparents' expenses (H2): Previously limited to parents only. Now covers grandparents too — medical treatment, dental treatment, special needs, and carer expenses up to RM8,000.
Medical examination (H7): Previously covered medical exams only. Now includes fees for disease detection tests such as blood tests, ultrasound, mammogram, and pap smear — including screening for COVID-19 and influenza.
Self-testing devices (H7ii): Previously limited to COVID-19 test kits. Now covers any self-testing medical device registered under the Medical Device Act 2012 — pulse oximeters, blood pressure monitors, thermometers, and more. Cannot be used for business purposes.
Lifestyle additional relief (H10): Previously for self, spouse, and child. Now includes parents (must be resident in Malaysia). Covers sports equipment, gym membership, sports facility rental, and competition fees.
Food waste composting machine (H21ii — New): A new relief for purchasing a food waste composting machine for household use. Allowed once every 3 years, within the RM2,500 combined limit with EV charging facility relief.
5. Form B Structure Has Changed
This is a compliance risk area. The form has been reorganised:
Section | YA 2024 | YA 2025 |
Chargeable income | Part B (single flow) | Part BA (split computation) |
Tax computation | One computation | Part BB (dual: 2% dividend + normal rates) |
Tax payable | In Part B | Part BC (separate section) |
The new structure means dividend income goes through a separate tax computation path. If you get the mapping wrong between B25, B26, B27, and B28, your tax will be misstated.
If you are preparing your computations using spreadsheets before e-Filing, you face higher risk of errors. Double-check the flow carefully.
6. Who Is Most Affected?
High impact:
• Individuals with dividend income above RM100,000
• Business owners holding private company shares
• Joint assessments involving a dividend-earning spouse
• First-time home buyers (2025–2027)
Medium impact:
• Taxpayers claiming multiple lifestyle or medical reliefs
• Families supporting parents or grandparents
• Disabled taxpayers or families with disabled children
7. Common Errors to Watch Out For
Based on the changes, we expect these common filing errors in YA 2025:
1. Omitting B22a / B22b in joint assessment cases
2. Treating dividend income as normal income instead of using the separate computation
3. Claiming H22 (first home relief) when the property is rented out or is not the first property
4. Claiming self-testing devices that are used for business purposes
5. Over-claiming H7 beyond the RM1,000 cap
6. Misunderstanding the EPF / insurance relief split after the restructuring
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What Should You Do Now?
1.Check your dividend income. If it may exceed RM100,000, plan for the 2% tax.
2.Buying your first home? Keep all S&P documents and loan interest statements.
3.Update your relief claims. Take advantage of the higher limits and expanded scope.
4.Prepare documents early. All records must be kept for 7 years.
5.Talk to us. The new form structure is more complex. Let us handle the computation so you don't make costly mistakes.
Filing deadline:
• Statutory deadline: 30 June 2026
• e-Filing (e-B) deadline: 15 July 2026 (includes 15 days grace period)(Note: Manual filing is no longer permitted for Form B from YA 2024 onwards. All submissions must be done via e-Filing.)
Late filing: Penalty under subsection 112(3) of the Income Tax Act 1967.Late payment: 10% increase under subsection 103(3).
Need Help?
We're here to assist. Whether you need clarification on the new dividend tax, want to check if you qualify for the first home relief, or just want us to review your YA 2025 tax position — reach out.
KS Chia & Associates (AF 001828)Chartered AccountantsWhatsApp us: 011 2366 5233
