Malaysia PCB guide 2026
Learn how PCB monthly tax deduction works in Malaysia, including how it is calculated, what affects PCB amount and how it relates to annual income tax.
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PCB, also known as Potongan Cukai Bulanan, is Malaysia's monthly tax deduction system. Employers deduct estimated income tax from employees' salaries and remit it to LHDN through monthly payroll.
What Is PCB?
PCB stands for Potongan Cukai Bulanan, which means Monthly Tax Deduction in Malaysia. It is a system where employers deduct estimated income tax from employees' monthly salary and pay it to LHDN on behalf of the employee.
PCB helps spread income tax payments across the year instead of requiring employees to pay the full tax amount only after submitting the annual income tax return.
How PCB Works in Malaysia
PCB is generally based on estimated annual chargeable income after considering income, deductions and applicable tax reliefs.
| Factor | How It Affects PCB |
|---|---|
| Monthly Salary | Higher salary usually increases estimated taxable income and PCB. |
| EPF Contribution | Employee EPF may reduce taxable income subject to applicable limits. |
| Tax Reliefs | Personal reliefs, spouse relief, child relief and other claims may reduce PCB. |
| Bonus / Allowance | Additional income may increase PCB for the relevant month. |
| Resident Tax Rate | PCB is affected by Malaysia's progressive income tax rates. |
How PCB Is Calculated
PCB is usually calculated by estimating your annual taxable income, deducting eligible reliefs and applying Malaysia's progressive income tax rates. The estimated annual tax is then spread across monthly payroll deductions.
PCB Calculation Example
Example based on a simple salary scenario:
| Item | Example |
|---|---|
| Monthly Salary | RM5,000 |
| Annual Salary | RM60,000 |
| Less: EPF and personal reliefs | Deduct eligible amounts based on tax rules |
| Estimated Tax Payable | Calculated using Malaysia progressive tax rates |
| Monthly PCB | Estimated annual tax divided into monthly deductions |
What Can Increase or Reduce PCB?
Your PCB amount may change when your income or personal tax position changes. This is why two employees with the same basic salary may have different PCB deductions.
Higher Income
Salary increments, bonuses and allowances may increase monthly PCB.
Tax Reliefs
Eligible reliefs may reduce chargeable income and lower PCB.
Personal Status
Spouse and child reliefs may affect the final tax calculation.
Bonus Payments
Bonuses and commissions may cause higher PCB in certain months.
PCB vs Annual Income Tax
PCB is not a separate tax. It is a monthly deduction toward your annual income tax. When you file your annual tax return, your final tax payable is compared against the PCB already deducted during the year.
| Item | Meaning |
|---|---|
| PCB | Monthly tax deduction made through payroll. |
| Income Tax Return | Annual filing to declare income, reliefs and final tax position. |
| Tax Refund | May happen if PCB deducted is higher than final tax payable. |
| Additional Tax Payable | May happen if PCB deducted is lower than final tax payable. |
PCB vs EPF, SOCSO and EIS
EPF, SOCSO and EIS are statutory payroll deductions or contributions, while PCB relates to income tax. Together, these items affect an employee's monthly take-home pay.
| Deduction | Main Purpose | Affects Take-Home Pay? |
|---|---|---|
| EPF | Retirement savings | Yes |
| SOCSO | Social security protection | Yes |
| EIS | Employment insurance | Yes |
| PCB | Monthly income tax deduction | Yes |
Who Needs to Pay PCB?
PCB normally applies to employees whose estimated annual income is high enough to create income tax payable after personal reliefs and deductions. Employers use payroll information to estimate the monthly deduction and remit it to LHDN.
Not every employee will have PCB deducted. For lower-income employees, the estimated tax payable may be zero after EPF, personal relief and other applicable deductions. This is why someone earning RM2,000 per month may have EPF, SOCSO and EIS deductions but no PCB deduction.
Why PCB Can Change From Month to Month
PCB is not always the same every month. It may change when salary changes, bonuses are paid, allowances are added, unpaid leave is processed or tax relief information is updated in payroll.
For example, a normal month may have low or no PCB, but a bonus month may create a higher PCB deduction because payroll treats the bonus as additional income for tax estimation. This does not automatically mean the final annual tax is wrong. The final position is still confirmed when the annual tax return is submitted.
PCB Examples by Salary Level
The table below shows simplified examples of how PCB may behave at different salary levels. Actual PCB depends on tax reliefs, personal status, EPF, bonuses and payroll settings.
| Monthly Salary | Common PCB Situation | Reason |
|---|---|---|
| RM2,000 | Often no PCB | Estimated chargeable income may be below taxable level after reliefs. |
| RM4,000 | May have low PCB | Tax depends on reliefs, EPF and personal circumstances. |
| RM6,000 | Usually more likely to have PCB | Higher annual income increases estimated tax payable. |
| Bonus month | PCB may increase | Additional income can increase monthly tax deduction. |
Tax Reliefs That May Reduce PCB
Tax reliefs reduce chargeable income, which can reduce the estimated PCB amount. Common reliefs include personal relief, EPF contribution relief, insurance or takaful relief, lifestyle relief, medical expenses, education fees and child relief.
However, payroll can only adjust PCB accurately when the required information is provided and accepted under the employer's payroll process. If certain reliefs are not reflected during the year, they may still be claimed during annual tax filing, subject to LHDN rules and supporting documents.
PCB, Tax Refund and Additional Tax Payable
PCB is only a monthly estimate. After the year ends, taxpayers file their income tax return and compare the final tax payable with the total PCB already deducted.
| Situation | Result |
|---|---|
| Total PCB is higher than final tax payable | Tax refund may arise after tax filing. |
| Total PCB is lower than final tax payable | Additional tax may need to be paid. |
| Total PCB equals final tax payable | No major refund or balance payable. |
PCB for Bonus, Commission and Allowances
Bonuses, commissions and certain allowances can affect PCB because they increase taxable employment income. Payroll may calculate a higher deduction in the month the additional income is paid.
This is one reason employees sometimes see a much lower take-home pay in bonus month than expected. The bonus increases gross income, but EPF and PCB may also increase. When reviewing a bonus payslip, it is useful to compare gross bonus, EPF, SOCSO, EIS and PCB separately.
Common PCB Payroll Mistakes
- Assuming PCB is a fixed percentage of monthly salary.
- Forgetting that bonus and commission can increase PCB.
- Confusing PCB with EPF, SOCSO or EIS deductions.
- Not updating employee tax relief or personal status information.
- Thinking PCB is the final tax amount before annual tax filing.
Official Reference
This guide is for general salary and payroll understanding. For actual income tax filing, PCB calculation rules, forms and compliance requirements, employees and employers should refer to LHDN official guidance or a qualified tax adviser.
Who Should Read This Guide?
- Employees checking why PCB is deducted from monthly salary
- Job seekers comparing salary packages and take-home pay
- HR and payroll professionals handling monthly tax deductions
- Business owners who want to understand PCB payroll obligations
Frequently Asked Questions
What is PCB in Malaysia payroll?
PCB, or Potongan Cukai Bulanan, is a monthly tax deduction made by employers from employees' salaries and paid to LHDN as part of the employee's income tax obligation.
Is PCB the same as income tax?
PCB is not a separate tax. It is a monthly deduction toward your annual income tax. Your final tax payable is confirmed when you submit your annual income tax return.
Why is PCB deducted from my salary?
PCB is deducted so that income tax is paid gradually throughout the year through payroll instead of being paid in one full amount after tax filing.
Why is my PCB different from another employee with the same salary?
PCB may differ because of tax relief claims, spouse or child status, bonuses, allowances, benefits, EPF contribution treatment and payroll settings.
Can PCB be reduced?
PCB may be reduced if eligible tax reliefs and deductions are properly reflected in payroll. However, the final tax position still depends on your annual income tax return.
Will I get a tax refund if PCB is too high?
If total PCB deducted during the year is higher than your final tax payable, you may be eligible for a tax refund after submitting your income tax return.
Does bonus affect PCB?
Yes. Bonuses, commissions and other additional income may increase PCB in the month they are paid because they increase estimated taxable income.
Related Salary Guides
Learn more about salary deductions, tax reliefs and payroll rules in Malaysia.
Related Calculators
Use these calculators to estimate PCB, salary deductions and monthly take-home pay in Malaysia.