How much of a pay rise you keep

Where RM100 goes

Each RM100 a month of a raise pays for four things before you see it:

• EPF: 11%, so RM11, though KWSP’s bands mean a small raise can cost a ringgit or two more or less.
• SOCSO and EIS: about RM1.40 together, until your salary reaches RM6,000; above that, nothing.
• Tax: your top rate on the part of the raise that’s chargeable income. While your own EPF is under RM4,000 a year, the RM11 of EPF is tax relief and only RM89 is taxed; above that, all RM100 is.
• You keep the rest.

The tax column is the change in the year’s tax, divided by 12, so it holds even where PCB moves from month to month. The employer’s column is the raise plus its EPF, SOCSO and EIS on it: at RM5,000 a raise costs the employer less than RM100, because its EPF rate drops from 13% to 12%.

Where each tax band starts

Only the income above a band’s start is taxed at its rate. For a single person with no reliefs beyond the automatic ones, each band starts at these monthly salaries:

Reliefs you claim move every line up: each RM1,200 a year of relief, such as life insurance or medical cover claimed on Form TP1, moves it about RM100 a month. The tax reliefs guide lists them.

The RM4,000 trap

Everyone with chargeable income of RM35,000 or less gets RM400 off their tax. For a single person with no other reliefs, that line is a salary of exactly RM4,000 a month: RM4,000 × 12, less RM4,000 of EPF relief and the RM9,000 personal relief, is RM35,000.

Past the line the whole rebate goes at once. A raise of RM10 a month to RM4,010 costs RM340 of take-home pay over the year, and you’re behind until the raise passes RM44.