Malaysia Budget 2027 for Expats: What Actually Changes

By Ciprian Bratu, Chartered MCSI · October 26, 2026

Last updated: 26 October 2026

Budget 2027 left the expat rules almost untouched, and for most expatriate families that is good news. The budget, tabled in the Dewan Rakyat on 9 October 2026, made one change that matters a great deal to some households: from 1 January 2027, the spouse of a Category I Employment Pass holder can work. It also trimmed two resident tax bands, raised the main personal relief, and extended the DE Rantau nomad pass. This guide covers each measure, who it applies to, and what stays exactly as it was in 2026.

Key Takeaways

The biggest expat change in Budget 2027: from 1 January 2027, Dependant Pass spouses of Category I Employment Pass holders can work in Malaysia, subject to conditions.
Resident tax rates fall by one point on two bands: 18% on 70,001 to 100,000 ringgit and 24% on 100,001 to 150,000 ringgit.
DE Rantau Nomad Pass holders who reach the two-year limit get two more years.
There is no MM2H measure and no change to the foreign-income position, so plans made in 2026 still hold.

Can Expat Spouses Work in Malaysia From 2027?

Yes, if your spouse holds a Category I Employment Pass and you hold a Dependant Pass. From 1 January 2027 you may work in Malaysia, subject to conditions. The Budget 2027 speech gives the reason plainly: to keep Malaysia attractive to top talent “without their spouses having to give up their careers”.

Two limits matter.

Which passes does it cover?

The speech names Category I Employment Pass holders only. Spouses of Category II and Category III pass holders are not mentioned. If your employer sponsored you on a lower category, assume the change does not apply to your household until the government says otherwise.

What are the conditions?

They have not been published. The speech says the right to work is “subject to the prescribed conditions”, and those conditions will decide how useful the change is in practice. Wait for them before a spouse accepts a Malaysian job offer.

What does it mean for your money?

A second income changes the household’s tax position, and it can change which country taxes each of you. If your household currently runs on one salary and investments abroad, that is worth planning before the first payslip, not after.

How Do the New Income Tax Rates Work?

Budget 2027 cuts resident income tax by one percentage point on two bands: 70,001 to 100,000 ringgit falls to 18%, and 100,001 to 150,000 ringgit falls to 24%.

Measure	Before	Budget 2027
Chargeable income 70,001 to 100,000 ringgit	One point higher	18%
Chargeable income 100,001 to 150,000 ringgit	One point higher	24%
Individual and dependent relatives relief	9,000 ringgit	12,000 ringgit
Income above 1 million ringgit		Adjusted to 30%

The government says about 5 million taxpayers will gain up to 1,600 ringgit a year in disposable income.

Does this help expats?

Less than the headlines suggest. These are rates for resident individuals. If you are not a Malaysian tax resident, these bands do not apply to you. Many senior expats also have little Malaysian chargeable income, because their wealth sits in pensions and investments abroad. The speech does not state the year of assessment these rates start from, so check that with LHDN before you rely on them in a payroll or tax calculation.

What happened to reliefs?

The main individual relief rises from 9,000 to 12,000 ringgit, the first review since 2010. Several reliefs widen too: medical relief now covers postpartum care, parent care covers all care-related costs, and the education relief covers all fields of study and children’s tuition.

What Changes for Digital Nomads?

DE Rantau Nomad Pass holders who reach the two-year limit get an additional two years to live and work remotely in Malaysia, subject to conditions. That gives remote workers four years in total on the pass, rather than having to leave or switch route at two.

If you are on DE Rantau and planning a longer stay, the extension is useful breathing room. It is still worth comparing with MM2H if you intend to stay beyond four years. Our MM2H requirements for 2027 set out the long-stay alternative.

What Stays the Same for Expats?

MM2H, the foreign-income position and the core expat tax rules are unchanged by Budget 2027. The speech contains no MM2H measure and no change to the tax treatment of foreign-sourced income.

MM2H

The MOTAC requirements table, last updated on 10 February 2026, still applies: fixed deposits of USD 150,000 for Silver, USD 500,000 for Gold and USD 1,000,000 for Platinum. Our MM2H 2027 guide has the full table.

Foreign income

The Budget did not touch the exemption for resident individuals’ foreign income. That exemption comes from a separate order, explained in our guide to the foreign-sourced income exemption. LHDN’s guidelines on income received from abroad set out the conditions, including that the income was taxed where it arose.

Property for foreigners

The budget’s new stamp duty exemptions apply to first homes priced up to 750,000 ringgit, for agreements signed from 1 January 2027 to 31 December 2030. The speech does not say foreign buyers qualify, so do not assume they do. Our article on stamp duty for foreigners buying in Malaysia covers the rate you actually pay.

What Else in Budget 2027 Affects Expat Families?

Two healthcare and care measures will touch many expat households: clearer private hospital bills from 2027, and lower service tax on elderly care from 1 January 2027.

Private hospital bills

From 2027, private hospital billing will use standardised, transparent fee categories. If you pay for private care through international health insurance, clearer bills make it easier to check what your insurer is paying for.

Elderly care

Service tax on elderly care services falls from 8% to 6% from 1 January 2027, with a full exemption on annual care fees up to 96,000 ringgit. If you have brought a parent to Malaysia, or plan to, that lowers the cost of care.

What Do We Tell Clients About Budget 2027?

Budget 2027 left the expat rules almost untouched, which is good news: the foreign-income position and MM2H stay as they were, so plans made in 2026 still hold.

The one change worth acting on is the spouse work rule. For a family on a Category I Employment Pass, a second Malaysian income changes three things at once: the household’s tax residence, how much of its income is taxed in Malaysia, and how much it can save. We would rather plan that before the job starts than untangle it after the first tax year.

When money moves into Malaysia also matters. Getting residence and timing right can save a meaningful amount of tax. Getting them wrong can cost you.

Frequently Asked Questions

When was Malaysia’s Budget 2027 tabled?

Prime Minister and Finance Minister Anwar Ibrahim tabled Budget 2027 in the Dewan Rakyat on Friday, 9 October 2026. The English translation of the speech notes that the Bahasa Malaysia version prevails if the two differ.

Can Dependant Pass holders work in Malaysia in 2027?

From 1 January 2027, spouses of Category I Employment Pass holders who hold a Dependant Pass can work, subject to conditions still to be published. Spouses of Category II and III pass holders were not included in the announcement.

Did Budget 2027 change MM2H?

No. The speech contains no MM2H measure. The MOTAC requirements remain as published, with fixed deposits from USD 150,000 for Silver. See our MM2H requirements for 2027.

Did Budget 2027 change tax on foreign income?

No. The speech does not mention foreign-sourced income. The exemption for resident individuals is set by a separate order, covered in our foreign-sourced income guide.

Do the lower tax rates apply to expats?

Only to expats who are Malaysian tax residents. The cuts apply to resident individuals with chargeable income between 70,001 and 150,000 ringgit. Non-residents are taxed under different rules, so these bands do not apply to them.

Can foreigners use the first-home stamp duty exemption?

The speech does not say so. It describes exemptions for first homes up to 750,000 ringgit for agreements signed from 1 January 2027 to 31 December 2030, without naming foreign buyers. Check eligibility before you rely on it.

If Budget 2027 changes your household’s income, the planning question is what it does to your tax residence and savings across countries. We can go through it with you.

Book a no-obligation call with Ciprian

This content is for informational purposes only and does not constitute personalised financial, investment, or tax advice. By reading this post, you agree to our disclaimer.