Salary Calculation in Malaysia: How to Calculate Net Salary After Deductions

PUBLISHED: Oct 30, 2026UPDATED: Oct 30, 202610 min read
Salary Calculation in Malaysia How to Calculate Net Salary After Deductions

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Your offer letter says RM5,000. Your bank account says something closer to RM4,300. Where did the rest go? If you’ve ever had that moment on payday, you’re not alone. In Malaysia, a chunk of every salary goes to EPF, SOCSO, EIS and income tax before it reaches you. None of it is a mystery once you see how each one works, and that’s what this guide is for. Whether you’re an employee checking your payslip or an HR person tired of calculating salary every month, you’ll find the numbers here.

What is Net Salary in Malaysia?

Net salary (gaji bersih) is the money that actually lands in your bank account after all deductions. Gross salary (gaji kasar) is the bigger number before anything is taken out. It usually includes your basic pay plus fixed allowances, commissions and overtime for the month.

The formula is simple:

Net Salary = Gross Salary − (EPF + SOCSO + EIS + PCB + Other Deductions)

When you compare job offers, gross salary tells you the headline. Net salary is what you should build your budget around.

What Deductions Come Out of Your Salary?

For most employees, four statutory deductions show up on the payslip. Here’s a quick look before we go into each one.
Deduction What it’s for Employee share (typical)
EPF (KWSP) Retirement savings 11% of wages
SOCSO (PERKESO) Injury and invalidity protection About 0.5%, based on wage bracket
EIS (SIP) Support if you lose your job About 0.2%, based on wage bracket
PCB (MTD) Monthly income tax to LHDN Depends on income and reliefs

EPF

If you’re a Malaysian under 60, you contribute 11% of your monthly wages. Your employer adds 13% if you earn RM5,000 or less, and 12% if you earn more. Once you turn 60, your own share drops to 0% and the employer pays a reduced rate. Foreign workers also contribute now, at 2% each from the employee and employer. You can choose to contribute more than 11% if you want to boost your savings.

SOCSO

SOCSO isn’t a flat percentage. It follows a wage bracket schedule, so someone earning RM3,480 and someone earning RM3,420 pay the same amount. The wage ceiling is RM6,000, which means the most an employee pays is RM29.75 a month. Employees aged 60 and above usually move to a category where only the employer contributes.

EIS

EIS also uses wage brackets with the same RM6,000 ceiling, working out to roughly 0.2% of wages. The maximum employee deduction is RM11.90. It covers employees aged 18 to 60, and your employer matches your share.

PCB

PCB is your income tax paid bit by bit every month, so you don’t get a big bill at year end. Two people on the same salary can have very different PCB because it depends on:
  • Your marital status and whether your spouse works
  • Number of children
  • Tax reliefs you’ve declared to your employer (insurance, medical, education and so on)
  • Whether you’re a tax resident. Non-residents are taxed at a flat 30%
  • Zakat paid through salary deduction, which reduces your PCB ringgit for ringgit
Lower earners often pay little or no PCB once reliefs and rebates are counted. Want a quick number? Try our free PCB Calculator. 
Check out: What is PCB in Malaysia?

Other deductions

Depending on your company, your payslip may also show staff loan repayments, salary advances, unpaid leave, or charges for parking and meals. These should be agreed in writing and shown clearly on the payslip.

Read also: Payslip: Meaning, Format & Example

How to Calculate Net Salary Step by Step?

  1. Add up your gross pay: Basic salary plus fixed allowances, commission and overtime for the month.
  2. Work out EPF: Multiply your EPF wages by 11%. Overtime isn’t included here (more on that below).
  3. Look up SOCSO and EIS: Find your wage bracket in the PERKESO contribution table. Don’t just multiply by a percentage, because the schedule rounds by bracket.
  4. Estimate PCB: Use LHDN’s formula or a PCB calculator with your marital status, children and reliefs.
  5. Subtract any other deductions: Loans, advances, unpaid leave and so on.
  6. What’s left is your net salary.
That’s it. The tricky parts are usually step 3 and step 4, because they don’t follow a neat percentage.
Table showing which salary payments in Malaysia are subject to EPF, SOCSO, EIS and PCB. Overtime is excluded from EPF, and annual bonus is excluded from SOCSO and EIS
Wages in Malaysia
Also read: Payroll Calculation Malaysia: Guide for Employers & Employees

How Much is Your Take-Home Pay on RM5,000?

Let’s take Aina. She’s 28, single, a Malaysian tax resident, and earns RM5,000 a month with no other deductions or extra reliefs claimed.
Item Amount (RM)
Gross salary 5,000.00
EPF (11%) − 550.00
SOCSO − 24.75
EIS − 9.90
PCB (estimate) − 108.00
Net salary about 4,307.35
So Aina takes home roughly RM4,300, or about 86% of her gross pay. If she were married with two kids, or claimed lifestyle and insurance reliefs, her PCB would drop and her net pay would go up a little.

For a lower earner, say RM2,500, the picture is simpler. EPF is RM275, SOCSO RM12.25, EIS RM4.90, and PCB is usually nil. Net pay comes to about RM2,207.85.

Do Employer Contributions Reduce Your Take-Home Pay?

No. Your employer’s share of EPF, SOCSO and EIS is paid on top of your salary, not taken from it. You’ll often see both on your payslip, which is where the confusion starts.

For employers, though, it’s a real cost. Using Aina’s RM5,000 salary:

  • Employer EPF (13%): RM650.00
  • Employer SOCSO: RM86.65
  • Employer EIS: RM9.90
That brings the total monthly cost of hiring her to about RM5,746.55. Companies registered with HRD Corp also pay a levy of 0.5% or 1% of wages, which again isn’t deducted from the employee.

Are Overtime, Bonus and Allowances Subject to EPF, SOCSO And EIS?

Not always, and this is where a lot of payslip errors come from. Each scheme defines “wages” a bit differently.

Payment EPF SOCSO EIS PCB
Basic salary Yes Yes Yes Yes
Commission Yes Yes Yes Yes
Fixed allowances (phone, meal, etc.) Usually yes Usually yes Usually yes Taxable unless exempt
Overtime No Yes Yes Yes
Annual bonus Yes No No Yes, calculated separately
Travel allowance for official duties No No No Exempt up to RM6,000 a year
Bonus months deserve a special mention. EPF takes 11% of the bonus too, and PCB on bonus follows a separate “additional remuneration” formula. That’s why your December or bonus-month payslip can look very different from a normal month. 
Check out: EPF Contribution Rate Malaysia 2026: Complete Guide

Why is Your Net Salary Different Every Month?

Even with a fixed basic salary, a few things can move the number:

  • Overtime: Under the Employment Act 1955, eligible employees (generally those earning RM4,000 or less) get at least 1.5 times their hourly rate on normal days, 2 times on rest days and 3 times on public holidays. The hourly rate is your monthly salary ÷ 26 ÷ normal daily hours. So on RM2,600 and an 8-hour day, that’s RM12.50 an hour and RM18.75 per overtime hour.
  • Unpaid leave: Each unpaid day is deducted from your pay, usually at monthly salary ÷ 26 or ÷ calendar days, depending on company policy.
  •  
  • Bonus and commission: Higher gross pay means higher EPF and often higher PCB that month.
  • Changes in reliefs: If you update your TP1 or TP3 forms, or get married mid-year, your PCB shifts.
  • Claims: Reimbursements for mileage or medical bills can be added to your payslip, usually without deductions.
For HR, these are also the inputs most likely to go wrong. Overtime hours pulled from a Attendance Software, unpaid days from a Leave Management Software and approved expenses from a Claims Management Software save a lot of manual checking before payday.

What are Common Mistakes in Salary Calculation?

A few we see again and again:

  • Budgeting on gross pay: RM5,000 on paper is closer to RM4,300 in hand. Plan with the smaller number.
  • Using a flat percentage for SOCSO and EIS: They’re bracket based. A simple 0.5% or 0.2% gets you close but not exact.
  • Charging EPF on overtime: Overtime is excluded from EPF wages.
  • Forgetting the age switch: Contribution rates change once an employee turns 60, and payroll often misses the month it happens.
  • Ignoring tax residency: Non-residents pay a flat 30% and can’t claim personal reliefs.
  • Using outdated tables: EPF, PERKESO and LHDN update their rules from time to time. Last year’s spreadsheet can quietly get things wrong.
If your payslip doesn’t match your own estimate, ask HR for the breakdown. It’s usually one of the points above. 
Also check: Malaysian Salary Management Checklist to Avoid Fines & Audits

How Can Employers Make Salary Calculation Easier?

Calculating net pay for five people by hand is fine. For fifty, with overtime, unpaid leave, bonuses and different tax profiles, it gets messy fast. One wrong bracket or missed rate change can mean late payment penalties from EPF or PERKESO, and a lot of unhappy staff.

A Payroll Software handles the heavy lifting. It applies the latest EPF, SOCSO, EIS and PCB rates automatically, generates payslips and EA forms, and prepares statutory submission files. When it’s part of a full HRMS Software, attendance, leave and claims flow straight into payroll, so nobody has to retype numbers. Staff can also clock in on the go with a Mobile Attendance App.

Salary Calculation FAQs

Is salary calculated based on 26 days or 30 days in Malaysia?

Both, depending on what’s being calculated. For overtime, rest day and public holiday pay, the Employment Act 1955 uses 26 days: your daily rate is monthly salary ÷ 26. For an incomplete month, like joining or leaving mid-month, the usual method is calendar days (salary ÷ days in that month × days worked). Unpaid leave varies by company, so check your contract or HR policy. On a RM2,600 salary, that’s RM100 a day using 26 days, or RM86.67 using 30.
Your basic salary is the fixed monthly amount in your employment contract. It doesn’t include allowances, overtime, commission or bonus. If you only know your gross pay, subtract those extras to get your basic. For example, RM3,500 gross with a RM500 fixed allowance means a RM3,000 basic salary. Daily-rated workers multiply their daily rate by days worked, and hourly-rated workers multiply their hourly rate by hours worked. Your basic salary can’t be below the RM1,700 minimum wage.
Multiply your current salary by 1.3. On RM4,000, that’s RM4,000 × 1.3 = RM5,200, an increase of RM1,200. Your take-home pay won’t rise by the full RM1,200, though. About RM132 of it goes to EPF (11%), SOCSO and EIS go up slightly, and your PCB will likely increase too. So compare net pay, not just the gross figure, before accepting an offer.
Because SOCSO and EIS use wage brackets. Your deduction only changes when your pay crosses into the next bracket.