Budget 2025: Essential Policies and Initiatives for All Malaysians
By Subaashinee Kupusamy,
19th October: Prime Minister Datuk Seri Anwar Ibrahim has unveiled Budget 2025, his third federal budget since assuming office. The RM421 billion plan is Malaysia’s largest ever, with RM335 billion allocated for operating expenditure and RM86 billion for development, excluding RM2 billion set aside for contingency savings.
Here are the key takeaways from Budget 2025:
1. Sales Tax Adjustments
Exemptions for Basic Food: Starting May 1, 2025, basic food items will be exempt from the expanded Sales and Service Tax (SST). However, premium imported goods such as salmon and avocado will still be taxed.
Expanded Service Tax: The service tax will now cover more sectors, including fee-based financial services.
2. Targeted RON95 Petrol Subsidies
By mid-2025, targeted subsidies for RON95 petrol will be introduced, ensuring 85% of the population continues to benefit. This move aims to address the rising subsidy costs, which hit RM20 billion in 2023.
3. 2% Dividend Tax
From the 2025 assessment year onwards, a 2% tax will be applied to dividend income exceeding RM100,000 for individual shareholders, broadening the tax base.
4. Increased Grants for Sabah and Sarawak
The special grants for Sabah and Sarawak will be doubled to RM600 million in 2025, marking the first increase since 1969.
5. Subsidy Reform in Healthcare and Education
Subsidies for boarding schools and healthcare will be refocused, with reduced assistance for the top 15% of income earners. High-income groups will contribute more towards public healthcare.
6. Flood Preparedness
An additional RM150 million will be allocated to Nadma and local authorities to enhance flood preparedness, following recent flooding incidents in Kuala Lumpur.
7. Increased Allocations for STR and Sara
The Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) programs will receive RM13 billion, benefiting 9 million Malaysians, or 60% of the adult population.
8. Minimum Wage Hike
The minimum wage will rise from RM1,500 to RM1,700 per month from February 1, 2025, with a six-month deferment for small businesses with fewer than five employees.
9. Support for First-Time Home Buyers
First-time home buyers will enjoy tax relief on loan interest payments: up to RM7,000 for homes valued up to RM500,000, and RM5,000 for homes valued between RM500,001 and RM750,000, for three consecutive years.
10. Cheaper Student Travel
Prasarana will offer van services for students at just 50 sen per trip from selected train stations. University, polytechnic, and community college students will also enjoy free BAS.My stage bus rides nationwide.
11. Sugary Drink Tax
From January 1, 2025, excise duty on sugary drinks will rise by 40 cents per litre, with the revenue directed towards diabetes and dialysis treatments.
12. Public Service Improvements
JPJ offices will extend their hours by one hour, and a new Urban Transformation Centre (UTC) will open in Seberang Perai. The MADANI Touch Kiosk will offer convenient cashless government services, including payments via e-wallets and digital platforms.
13. Special Assistance for Civil Servants and Pensioners
Civil servants Grade 56 and below will receive RM500 in special assistance, while pensioners will get RM250. This will be paid out in February 2025.
14. Support for Autistic Children
Over 110,000 disabled students will receive a RM150 monthly allowance. Additionally, two new schools for special needs students will be built in Tuaran, Sabah, and Johor Bahru.
15. Rahmah Cash Aid (STR) for Singles and Households
Single individuals will receive RM600 under STR, while households can receive up to RM4,600, an increase from the current RM3,700. Sara assistance will also extend to more households next year.
16. Mandatory EPF Contributions for Non-Citizens
The government will make EPF contributions mandatory for non-citizen workers, promoting inclusivity in retirement savings.
Budget 2025 charts a path towards economic reform, with a focus on inclusivity and sustainability, aiming to improve the lives of all Malaysians as stated in Astro Ulagam.
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