How PCB (monthly tax deduction) is calculated in Malaysia, 2026
PCB (potongan cukai bulanan, also called MTD, monthly tax deduction) is the income tax your employer takes from each month's pay and pays to LHDN for you. It is not the final tax: the tax for the year is worked out when you file, and the PCB paid counts as a payment towards it. This guide follows the LHDN specification for computerized calculation, updated 1 January 2026, for a resident employee on a fixed monthly salary.
The formula
Each month the employer estimates the chargeable income for the whole year, P, as if this month's pay continued to December. P is the pay already paid and the pay for this and the remaining months, less the EPF counted (up to RM4,000 a year) and the compulsory deductions: RM9,000 for the individual, RM4,000 for a spouse who is not working, and RM2,000 for each child. P is then looked up in Table 1 for M, R and B, and the tax for the month is ((P - M) x R + B) less the PCB already paid, divided by the number of months left including this one.
| Chargeable income P | M | Rate R | B (single or spouse working) | B (spouse not working) |
|---|---|---|---|---|
| RM5,001 to RM20,000 | RM5,000 | 1% | -RM400 | -RM800 |
| RM20,001 to RM35,000 | RM20,000 | 3% | -RM250 | -RM650 |
| RM35,001 to RM50,000 | RM35,000 | 6% | RM600 | RM600 |
| RM50,001 to RM70,000 | RM50,000 | 11% | RM1,500 | RM1,500 |
| RM70,001 to RM100,000 | RM70,000 | 19% | RM3,700 | RM3,700 |
| RM100,001 to RM400,000 | RM100,000 | 25% | RM9,400 | RM9,400 |
| RM400,001 to RM600,000 | RM400,000 | 26% | RM84,400 | RM84,400 |
| RM600,001 to RM2,000,000 | RM600,000 | 28% | RM136,400 | RM136,400 |
| Over RM2,000,000 | RM2,000,000 | 30% | RM528,400 | RM528,400 |
B already includes the tax rebate of RM400 for the individual, and a second RM400 for a spouse who is not working. That is why B is negative in the first two bands, and why category 2 (spouse not working) has a different B only up to RM35,000. The rates above are the resident rates for the years of assessment 2023 to 2025 on the LHDN page, and the 2026 specification keeps them: 1% above RM5,000, 3% above RM20,000, 6% above RM35,000, 11% above RM50,000, 19% above RM70,000, 25% above RM100,000, 26% above RM400,000, 28% above RM600,000, 30% above RM2,000,000.
Worked example: RM8,000 a month, single
| Step | Amount |
|---|---|
| Gross pay this month (Y1) | RM8,000.00 |
| EPF this month (K1) | RM880.00 |
| EPF still to come each month (K2) | RM283.63 |
| Pay before this month (Y - K) | RM0.00 |
| Pay now less EPF (Y1 - K1) | RM7,120.00 |
| Pay for the other 11 months less estimated EPF ((Y1 - K2) x 11) | RM84,880.07 |
| Less individual relief (D) | -RM9,000.00 |
| Chargeable income P | RM83,000.07 |
| Tax for the year: (P - RM70,000) x 19% + RM3,700 | RM6,170.01 |
| Divided by 12 months (n + 1), truncated | RM514.16 |
| PCB for the month, rounded up to 5 sen | RM514.20 |
The first month's PCB is RM514.20. Over the 12 months the PCB is RM6,170.00, because each later month subtracts the PCB already paid and divides what is left by the months remaining. The income tax from the yearly assessment is RM6,103.50: it also deducts the SOCSO and EIS relief of RM350.00, which PCB leaves out unless the employee claims it on Form TP1.
Rounding and the RM10 rule
The specification drops figures beyond two decimals at each step, then rounds the monthly deduction up to the next 5 sen: RM287.02 becomes RM287.05 and RM152.06 becomes RM152.10. If the amount is under RM10 the employer deducts nothing. A non-resident employee has 30% deducted from pay, so RM3,000 a month gives RM900. A foreign worker with an employment contract of 182 days or more is treated as a resident.
When PCB is nil, and when it jumps
If P is RM5,000 or less, or the rebate in B takes the tax to zero, no PCB is deducted. On RM2,000 a month a single citizen pays no PCB all year. Near RM35,000 of P the rebate stops, and the monthly figure can move. At RM4,000 a month the first month is RM50.00, and the 12 months total RM328.50, because P hovers around RM35,000 and a few sen decide which side it falls on.
PCB against the tax for the year
| Monthly salary | PCB in the first month | PCB over the year | Income tax for the year | Tax less PCB |
|---|---|---|---|---|
| RM3,000 | RM0.00 | RM0.00 | RM0.00 | RM0.00 |
| RM4,000 | RM50.00 | RM328.50 | RM189.50 | -RM139.00 |
| RM5,000 | RM110.00 | RM1,320.00 | RM1,299.00 | -RM21.00 |
| RM8,000 | RM514.20 | RM6,170.00 | RM6,103.50 | -RM66.50 |
| RM12,000 | RM1,429.20 | RM17,150.00 | RM17,062.50 | -RM87.50 |
| RM20,000 | RM3,429.20 | RM41,150.00 | RM41,062.50 | -RM87.50 |
A negative last column means the PCB paid is more than the tax for the year, and the difference comes back when you file. The yearly assessment includes the SOCSO and EIS relief, up to RM350. This is general information about how the figures are worked out, not a statement of what your own assessment will be.
Work out your own PCBSources
- LHDN: 2026 specification for monthly tax deduction (MTD) calculations using computerized calculation
- LHDN: individual tax rates
- LHDN: tax reliefs
- LHDN: rebates
- Every rate used, with its source and check date: Sources and rates
This calculator is general information only. It uses the LHDN, EPF and PERKESO pages listed on the Sources page, and your payslip, tax bill and personal situation may differ. Rates as at 2 November 2026.