Evaluating the Effectiveness of Tax Reliefs and Rebates in Reducing Financial Burden for Malaysian Taxpayers: Evidence from Year of Assessment 2024

Abstract

Tax reliefs and rebates are designed to reduce taxpayers’ financial burden by lowering chargeable income and tax payable. However, increasing living costs, inflationary pressures, and rising household expenses have raised concerns regarding the adequacy and relevance of existing relief provisions. Therefore, this study was carried out to evaluate the effectiveness of personal tax reliefs and rebates under the Malaysian Income Tax Act 1967 in reducing the financial burden of individual taxpayers for the Year of Assessment (YA) 2024.The data collection and discussion combined statutory analysis with survey-based evidence via a digital questionnaire. The population was Malaysian resident taxpayers and samples were chosen by means of random sampling. A total of 92 valid responses were analysed using descriptive statistics and thematic analysis to identify taxpayers’ perceptions regarding the relevance and adequacy of existing tax reliefs. Main findings showed that reliefs and rebates for the year assessment of 2024 were able to reduce financial burden but only to some extent. However, single taxpayers benefited less from the statutory provisions as compared to the married couples with children and parents. Several suggestions were obtained including to relax and revise the statutory provisions. The amount of reliefs and rebates were also should be increased to match the increase in cost of living. Additionally, new types of reliefs and rebates as per neighbouring countries are welcomed.