PETALING JAYA: Economists are urging tax authorities to update personal tax reliefs to help families tackle rising childcare, healthcare and eldercare costs.
They said changing family structures and increasingly complex financial responsibilities mean the current relief framework should be reviewed to ensure support reaches taxpayers who need it most.
Sunway University economics professor Dr Yeah Kim Leng said the biggest gaps include stagnant child reliefs, inadequate childcare and education support and limited recognition for taxpayers supporting both children and ageing parents.
“Malaysia’s tax relief structure is built around the traditional nuclear family and systematically underserves single-income households, single adults supporting ageing parents and those caring for dependants outside the legal parent-child relationship,” he said.
Yeah said the framework should recognise “financial responsibility rather than rewarding one particular family form”, including broader dependant and eldercare reliefs.
“The most practical solution is a hybrid that keeps simple fixed reliefs as a baseline while adding targeted supplements for high-cost locations or specific caregiving commitments,” he said.
Tunku Abdul Rahman University of Management and Technology economist Assoc Prof Dr Foo Lee Peng said existing reliefs remain relevant, pointing to recent measures covering medical and care expenses as well as broader childcare support.
“However, there is room to review whether the relief limits and eligibility conditions adequately reflect essential household costs,” she said.
Foo said the biggest gaps are in ongoing caregiving expenses, support for dependent adults and households managing several responsibilities at the same time.
“Tax reliefs also offer little or no assistance to people who already pay little or no income tax,” she added.
Foo said this is particularly important for households with significant care responsibilities but limited taxable income, as increasing deductions alone would not necessarily provide meaningful assistance.
“For Budget 2027, priority should be given to essential healthcare, disability-related expenses, childcare and care for dependent elderly family members,” she said.
Foo said the government should first assess the adequacy and take-up of existing reliefs before introducing wider increases, favouring basic reliefs with capped deductions for clearly defined essential needs.
Universiti Teknologi Mara economist Dr Mohamad Idham Md Razak said household structures have become more diverse, while childcare, elderly care, healthcare, education and dependent support could significantly reduce disposable income.
He said any changes should be designed to provide meaningful support across income groups without disproportionately benefiting higher-income taxpayers.
“Core reliefs should remain simple, with targeted support for healthcare and dependent care, while measures should directly protect household disposable income,” he said.
He said clear eligibility criteria would also be needed to ensure expanded reliefs remained transparent, easy to claim and targeted at genuine household needs.
“Ultimately, the tax relief system should reflect the financial pressures faced by modern households while remaining fair, simple and accessible across income groups,” he added.
