KUALA LUMPUR: Below are the highlights from Budget 2026, themed the Fourth MADANI Budget: People’s Budget, which was tabled by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim.
Budget 2026 will optimise national resources, including GLIC funds, federal bodies and government-linked firms, with public spending rising to RM470 bln from RM452 bln last year.
The government has allocated RM180 million under the NIMP Industry Development Fund to finance industrial development programmes in high-impact sectors.
GLICs, through the GEAR-UP initiative, will increase domestic investments to RM30 bln compared to RM25 bln this year.
Malaysia's Budget 2026, tabled on October 10, 2025, includes tax changes such as a 100% tax exemption on new national cars for taxi drivers and an increase in excise duties on cigarettes and alcohol. The budget also focuses on strengthening social protection, enhancing public healthcare funding, and promoting investment in semiconductors. Key tax-related highlights include expanded tax relief, but specific details on personal income tax changes were not yet available in the search results. Key tax and budget highlights
Taxi drivers:
Receive a 100% tax exemption on new national cars and RM10 million allocated for skills training. Excise duties:
Increased on cigarettes and alcohol starting November 1, 2025, as part of the government's focus on promoting healthier lifestyles. Public healthcare:
RM46.5 billion is channeled into public healthcare, which includes expanded tax relief and insurance access for Malaysians. Government pay cut:
Ministers will continue a 20% pay cut as part of the civil servant revamp. Fiscal consolidation:
The budget aims for modest fiscal consolidation, with the deficit expected to narrow to between 3.4% and 3.6% of GDP. Investment focus:
The budget prioritizes investment in semiconductors and other sectors to boost household income and economic resilience. Holistic approach:
The budget is designed to be holistic, addressing public concerns about the rising cost of living while building on recent gains in health, education, and infrastructure.
Under the NSS, BPMB offers RM500 mln in loans to boost high-value-added activities in the local E&E ecosystem.
iTEKAD with RM35 mln matching funds to be expanded.
SJPP is ready to guarantee up to 70 per cent financing for export-oriented mid-tier companies with a guarantee value of up to RM5 bln.
Over RM2.5 bln in microloans provided under BSN and TEKUN.
Development Financial Institutions (DFIs) provide financing and grants of close to RM1 bln to support the automation process and digitalisation of business operations.
Government loan facilities and guarantees available to benefit local entrepreneurs will amount to RM50 bln next year, compared with RM40 bln currently.
The government plans to limit vehicle tax exemptions in Langkawi and Labuan to vehicles valued at no more than RM300,000, effective Jan 1, 2026.
Federal government revenue collection is estimated to increase to RM343.1 bln in 2026 compared to the projected RM334.1 bln this year.
Khazanah, KWAP have invested RM550 mln in the semiconductor ecosystem to strengthen partnerships between local firms and multinational companies.
The government is allocating RM20 mln to support startups in mechanisation and automation with MPOB and major palm firms.
Government loan facilities and guarantees available to benefit local entrepreneurs will amount to RM50 bln next year, compared with RM40 bln currently.
The government allocates RM20 mln to support startups in mechanisation and automation with MPOB and major palm firms.
The government allocates close to RM120 mln to protect the welfare of smallholders.
The government proposes to increase the salary threshold value for employment contracts exempted from stamp duty from RM300 to RM3,000 per month beginning Jan 1, 2026.
GLICs and GLCs are mobilising investments worth RM16.5 bln for next year.
The carbon tax to be introduced next year will initially focus on the iron, steel and energy sectors.
NETR continues to be driven by industry players with the support of the National Energy Transition Fund amounting to RM150 mln.
Government is continuing to provide rebates for the purchase of energy-efficient equipment for consumers and businesses, with an allocation of RM20 mln.
The government plans to extend the application period for the income tax exemption for social enterprises until 2028.
The government has agreed to increase the excise duty rate on alcoholic beverages by 10 per cent starting Nov 1, 2025.
Government extends import duty and sales tax exemption on nicotine replacement therapy, including nicotine mist and lozenges, until Dec 31, 2027.
The government proposes to extend the full stamp duty exemption on transfer instruments and loan agreements for the purchase of first homes priced up to RM500,000 for another two years, until Dec 31, 2027.
The government proposes raising the stamp duty on residential property transfers by non-citizens and foreign companies from four per cent to eight per cent.
Government proposes 10 per cent special tax deduction on costs to convert commercial buildings into housing, capped at RM10 mln.
Allocation for RDCI activities across ministries reaches nearly RM5.9 bln.
The Sovereign AI Cloud will be built by the MCMC with an investment of RM2 bln.
The government plans an additional 50 per cent tax cut for SMEs for AI, cybersecurity training costs.
The ‘Made in Malaysia’ logo labelling and the ‘Buy Malaysian Products’ campaign will continue to be strengthened with an allocation of RM20 mln to increase the exposure of Malaysian products in local and international markets.
The MATRADE Market Development Grant provides RM60 mln to facilitate MSMEs in exporting Malaysian-made products to existing and new markets, including Africa, Latin America, and Central Asia.
MCMC to build Sovereign AI Cloud with RM2 bln investment.
EXIM Bank provides soft loans to assist companies affected by global trade tariff tensions with RM500 mln funding.
The government has agreed to channel a RM10 mln initial fund through the establishment of the Dana Nasional Syarikat Terbitan.
After rationalising overseas offices, the government will launch a RM10 mln Strategic Economic, Trade and Investment Network for high-potential new markets.
RM53 mln under the Malaysia Digital Accelerator Grant is provided to accelerate growth and the adoption of technologies such as blockchain, AI, and quantum computing.
RM60 mln MATRADE grant to assist SMEs to export to new and existing markets, including Africa, Latin America and Central Asia.
RM40 mln for high-potential Bumiputra companies to scale up
Ekuinas will develop its investment companies to the point of being listed and acquired by PNB, following the merger of Ekuinas and PHB under YPB.
KWAP allocates RM20 mln for microfinance programmes for retirees, empowering community-level entrepreneurship.
RM2.4 bln to be allocated specifically for Bumiputera contractors in categories G1 to G4.
RM10 bln of the RM30 bln government guarantee under SJPP is earmarked to support Bumiputera entrepreneurs.
SME Bank’s Regional Champions Programme provides RM200 mln in loans to Bumiputera SMEs to penetrate export markets.
The CIDB will provide RM10 mln to boost the competitiveness of Bumiputera entrepreneurs, especially young contractors in the construction industry.
MARA Bumiputera Entrepreneur Scaling Programme provides RM100 mln to support the growth of startups in high-value strategic sectors.
RM105 mln allocated to VentureTECH to boost Bumiputera equity ownership in high-tech sectors.
A total of RM230 mln has been allocated to AIM to continue offering financing, bringing its total available funds to RM2.9 bln.
The government has agreed to channel a RM10 mln initial fund through the establishment of the Dana Nasional Syarikat Terbitan.
Govt proposes a 10 per cent special tax deduction on costs to convert commercial buildings into housing, capped at RM10 mln.
Overall subsidy targeting saves national funds around RM15.5 bln per year.
The government will amend the Consumer Protection Act to include elements of a Lemon Law to safeguard the rights of consumers.
Malaysia will continue to lead the field of AI and foster research, development, commercial and creative activities.
RM53 mln under the Malaysia Digital Accelerator Grant is provided to accelerate growth and the adoption of technologies such as blockchain, AI, and quantum computing.
The government proposes 100 per cent Green Asset Investment Tax Allowance for Own Use be given to companies that use locally manufactured green technology products recognised by MyHIJAU Mark.
After rationalising overseas offices, the government launches a RM10 mln Strategic Economic, Trade and Investment Network for high-potential new markets.
Bank Rakyat, BSN, MARA and SME Bank provide RM270 mln in financing to support women MSME entrepreneurs.
The e-Invoice initiative will be implemented comprehensively from 2026, as well as a stamp duty self-assessment system to foster tax compliance.
The Reform Agenda has successfully streamlined more than 1,000 projects, reducing compliance costs by up to RM1.1 bln - one of the key factors behind Malaysia’s 11-spot jump in the World Competitiveness Index.
The government will introduce ASEAN Business Entity (ABE) Status, which is consistent with the Securities Commission.
The Single-Family Offices Incentive Scheme in the Forest City Special Financial Zone achieved major success, with six family offices approved with assets under management (AUM) of nearly RM400 mln in under a year.
Another 30 family offices have expressed interest, putting Malaysia on track to achieve RM2 bln in assets under management (AUM) by the end of 2026.
Beginning in the first quarter of 2026, the new Performance-based Incentive Framework will be fully implemented for the manufacturing sector, which will be followed by the services sector in the second quarter. - Bernama
