There are two methods to calculate tax in Malaysia. Don’t worry! This guide will walk you through both methods, ensuring you understand and can accurately apply each one.

Computerized calculation will be based on the LHDN MTD calculator. This calculation method considers the employee's taxable income, EPF contributions, marital status, and dependent children for the year. Follow the steps below to use the LHDN PCB calculator for accurate tax calculations.

Steps:

1. Select Previously NOT Employed in Current Year in the calculator.
   
   
2. Input the employee’s details, including taxable income, EPF, marital status, and number of children.
   
   
   
3. Click CALCULATE to generate the tax amount.

B. Previously Employed in the Current Year

Use this option for employees with income from prior months in the same year.

Example: 

• Payroll month: March
• Salary RM 5,500.00
• EPF: RM 605.00
  
  
• Marital status: Married and spouse is working
• Children: Under 18 or in education (100%)

• Year-to-date taxable income (Jan–Feb): RM 11,000.00
• Total EPF (Jan–Feb): RM 1,210.00
• Total MTD (Jan–Feb): RM 321.70
  (Refer to the staff tax details to retrieve this data.)

Steps:

1. Provide the payroll month, marital status, and children's relief details.
   
   
2. Input the previous months' income, EPF contributions, and MTD in the ACCUMULATED REMUNERATION section.
   
   
3. Enter the current month's income and EPF in the CURRENT MONTH’S REMUNERATION section.
   
   
4. Click CALCULATE to generate the tax amount.
   

Important Note: If the employee has benefits-in-kind, Zakat contributions, or other deductions, make sure to include these details in the MTD calculator for accurate tax computation.

2. Non-computerized calculation

This method is based on the MTD table and does not factor in prior income. It calculates tax based only on the current month's payroll.

Steps:

1. Determine the employee’s category based on their status (e.g., Category 2, KA1).
   
   
   
2. Calculate taxable income:
   • RM 5,500.00 - RM 333.33 = RM 5,166.67
     
     
3. Refer to the PCB Table to find the corresponding tax amount (e.g., RM 162.15 for this example).

Additional guidelines: 

• What is the difference between computerized and non-computerized calculation method?
• Normal Remuneration vs. Additional Remuneration
• How to set Monthly Tax Deduction calculation method?
• How to input employee's previous employment income?
• How do I key in my backdated payroll?