Updated for 2025 — all the new EPF, SOCSO, EIS & PCB changes included!
If you’re the one in charge of calculating staff salaries every month, you already know — one small mistake can snowball into a ‘boss calling you at 7 PM’ kind of disaster.
This guide (and calculator!) will help you understand exactly how to calculate net pay, keep up with Malaysia’s latest payroll rules, and make sure every payslip is LHDN-approved.
What's New in Malaysia Payroll for 2025?
Before you start punching in numbers, here’s what changed this year:
| Change | 2025 Update | Why It Matters |
|---|---|---|
| Minimum Wage | RM1,700/month | Affects all employees (except domestic workers) |
| EPF (KWSP) | 2% mandatory for non-Malaysians (from Oct 2025) | New rule for expats and foreign hires |
| SOCSO / EIS Ceiling | Raised to RM6,000 | Petty cash advance, project floaHigher coverage and slightly higher deductionst |
| Tax Reliefs | Updated YA 2025 reliefs | Impacts PCB calculations |
If your payroll spreadsheet still uses 2024 figures, it’s officially outdated.
To understand the definition of “wages”, coverage and compliance requirements under the Employment Act 1955 (Malaysia)—take a look at Definition of “Wages” for the full breakdown.
How to Calculate Net Salary in Malaysia (Step by Step)
1. Start with Gross Salary
This includes:
- Basic pay
- Fixed allowances
- Overtime or commissions
2. Subtract Statutory Deductions
| Deduction | Employee Rate | Employer Rate |
|---|---|---|
| EPF | 11% | 13% (≤ RM5,000 salary) / 12% (> RM5,000) |
| SOCSO | 0.5% | 1.75% |
| EIS | 0.2% | 0.4% |
| PCB | Based on LHDN table | - |
To understand payroll components and calculation formulas in Malaysia, take a look at Payroll Components & Calculation Formulas Explained.
3. Result = Net Salary
Example: If your gross salary is RM 4,000, your net take-home pay after all deductions is roughly RM 3,420.
Payroll Tip for Companies Hiring Foreign Workers
Starting October 2025, even non-Malaysian employees with valid work passes must contribute 2% EPF each, matched by their employer.
Example: A foreign worker earning RM 3,000 → Employer pays RM 60 EPF, Employee pays RM 60 EPF.
So, yes — your payroll template needs a foreign-worker column now.
To get your accounting sorted — including accruals, salary payouts, EPF & SOCSO journal entries — check out our full guide on how to record salary, EPF & SOCSO payments and make sure your books stay compliant and audit-ready.
Salary Proration & Overtime – The Correct Way
Prorated Salary (new joiners / resignations)
Salary = Monthly Salary × (Days Worked / Days in Pay Period)
Overtime Calculation (Employment Act 1955):
- Normal Day OT = 1.5× hourly rate
- Rest Day OT = 2× hourly rate
- Public Holiday OT = 3× hourly rate
Hourly rate = Monthly Salary ÷ (26 × hours per day)
Unused Leave Pay (when resigned):
Leave Pay = (Monthly Salary / 26) × Unused Leave Days
Always use 26 days as the standard divisor — it’s what the Employment Act recognizes.
To get your payroll management ship‑shape—covering salary payouts, payslip issuance and leave rules—check out Salary, Payslip & Leave Rules for Malaysian Employers.
PCB Tax Reliefs You Should Know for 2025
| Relief Item | Max Amount (RM) | Note |
|---|---|---|
| Self (Individual) | 9,000 | Automatically applied |
| Medical & Parental Care | 8,000 | Must have medical proof |
| Education (Self) | 7,000 | Approved courses only |
| Disabled Individual | 6,000 | Extra relief for OKU status |
Payroll Tip: Always remind employees to update their TP1 and TP3 forms — it helps you calculate PCB and keeps everyone happy when tax season comes.
Average Salaries in Malaysia (2025 Guide)
| Location | Avg Monthly Salary (RM) |
|---|---|
| Kuala Lumpur | 6,700 |
| Selangor | 6,300 |
| Penang | 5,900 |
| Johor | 5,700 |
| Sabah & Sarawak | 5,200 |
Top-paying sectors in 2025:
- Technology & IT
- Finance & Accounting
- Manufacturing & Engineering
Even if you’re not in these industries, it helps HR clerks benchmark fair pay and avoid underpaying staff.
Why You Need a Powerful Payroll System Like AutoCount Payroll
Let’s face it — keeping up with EPF, SOCSO, EIS and PCB contribution updates manually can feel like doing math homework on a moving train.
That’s why many companies now use AutoCount Payroll to handle the heavy lifting.
- Always up to date: Auto-updates statutory rates and PCB formulas.
- One-click reports: Generate EPF, SOCSO and EIS files for submission.
- Error-proof calculations: Handles proration, bonuses and allowances accurately.
- Syncs with AutoCount Accounting: So your payroll costs match your books instantly.
When your payroll is automated and compliant, you can spend less time fixing errors and more time drinking that well-earned kopi O.
If your team is still using Excel to calculate EPF and PCB every month, it’s time to level up. With AutoCount Payroll, compliance is no longer a headache — it’s built in.
Final Takeaway
Payroll is not just about numbers — it’s about trust and compliance.
By using the latest Salary Calculator Malaysia 2025, understanding the rules, and leveraging a tool like AutoCount Payroll, you can run accurate, stress-free payroll every month.
Payroll mistakes cost money. Payroll accuracy builds trust.
Disclaimer
This salary calculator provides estimates for educational purposes only. Actual take-home pay may vary based on individual tax circumstances, specific employment terms, and exact statutory calculations. Always consult with qualified professionals or use verified payroll software like AutoCount Payroll for official salary processing.
Frequently Asked Questions
Why is my net salary different from what shows in the calculator?
Our calculator gives you a close estimate, but small differences can happen because the actual PCB uses LHDN’s complex monthly tax tables and your specific tax reliefs declared on TP1/TP3 forms. For 100% accuracy that’s LHDN-approved, you’d need a proper payroll system like AutoCount Payroll.
When does the 2% EPF for foreign workers start?
The mandatory 2% EPF contribution for non-Malaysian employees starts from October 2025. This applies to foreign workers with valid work passes, and employers must match this 2% contribution. So if you’re hiring foreign workers, make sure your payroll template has a separate column for this starting October 2025.
Why do we use 26 days to calculate hourly rates and leave pay?
We use 26 days because that’s what the Employment Act 1955 recognizes as the standard divisor. This applies to calculating your hourly rate for overtime and paying out unused leave when someone resigns. Using 26 days instead of calendar days ensures compliance and fair calculation for all employees.
What's the maximum salary for SOCSO and EIS deductions?
For 2025, the SOCSO and EIS contribution ceiling is RM6,000. This means if you earn RM6,000 or less, deductions are calculated on your full salary. If you earn more than RM6,000, deductions are capped at RM6,000. So if you earn RM8,000, your SOCSO and EIS are still calculated as if you earn RM6,000.
How do I make sure my payroll is always compliant?
Manual calculations in Excel can easily become outdated when rules change. The safest way is to use dedicated payroll software like AutoCount Payroll because it auto-updates statutory rates, generates ready-to-submit files for government agencies, handles complex calculations accurately, and syncs with accounting software. This saves you from the “boss calling you at 7 PM” kind of payroll disasters!
Try the Malaysia Net Salary Calculator 2025
Instantly see your take-home pay with EPF, SOCSO, EIS & PCB deductions calculated for you.
