Payroll Calculator Malaysia

A payroll calculator is a tool that helps businesses calculate employee salaries after applicable statutory deductions.

In Malaysia, payroll calculations generally involve gross salary, employee contributions, employer contributions and monthly income tax deductions.

For example, when an employee earns RM5,000 per month, the employer needs to determine how much EPF, SOCSO and EIS applies, whether PCB must be deducted and how much salary the employee should receive.

The employer also has its own statutory contribution obligations.

A payroll calculator brings these figures together, making it easier to review salary calculations before processing payroll.

The first step in calculating payroll is to identify the employee's gross monthly earnings.

From there, you need to determine which payments are subject to statutory contributions and calculate the applicable deductions.

Gross salary is the employee's total remuneration before deductions.

It may include basic salary, allowances, overtime, commissions, bonuses and other payments.

However, different types of payments can have different treatment under EPF, SOCSO, EIS and PCB rules.

For example, an employee may receive RM4,500 in basic salary and RM500 in additional allowances, giving a total gross remuneration of RM5,000.

Before calculating statutory deductions, check whether each payment is included in the contribution wage basis.

EPF is Malaysia's retirement savings fund.

For most Malaysian employees below 60, the standard employee contribution rate is 11%.

The employer generally contributes 13% for monthly EPF wages of RM5,000 or below, or 12% when monthly wages exceed RM5,000.

The actual contribution amounts must follow the applicable KWSP Third Schedule.

SOCSO provides social security protection for eligible employees.

The contribution depends on the employee's age, employment category, wages and applicable protection schemes.

For eligible First Category employees, both employers and employees contribute under the official PERKESO schedule.

Additional contributions under LINDUNG 24 Jam may also apply.

EIS stands for Employment Insurance System.

It provides eligible employees with financial support and employment assistance following qualifying job loss.

The standard contribution rate is 0.2% for employees and 0.2% for employers, subject to the official PERKESO contribution schedule.

PCB, also known as MTD, is the monthly income tax deducted from an employee's remuneration.

The amount depends on annual taxable income, tax residency, eligible reliefs, previous income and other relevant information.

Employers should use the applicable LHDN computerized PCB calculation specification when determining monthly tax deductions.

After calculating all applicable employee deductions, subtract them from the gross remuneration.

Net Salary = Gross Salary − Employee EPF − Employee SOCSO − Employee EIS − PCB − Other Employee Deductions

The result is the estimated amount the employee receives.

An employer's payroll cost includes more than the employee's gross salary.

Employers must also account for their statutory contributions.

Total Employer Payroll Cost = Gross Salary + Employer EPF + Employer SOCSO + Employer EIS + Other Applicable Employer Costs

This helps businesses plan their monthly payroll budget more accurately.

Let's look at an example of an employee earning RM5,000 per month.

Assume the employee is a Malaysian citizen below 60 years old, is eligible for standard First Category SOCSO and EIS contributions, and has no additional remuneration.

This example excludes additional SKBBK contributions and any other applicable payroll adjustments.

The employer also pays its own statutory contributions.

This example shows the difference between employee take-home salary and the actual cost of employment.

An employee's salary deductions reduce their take-home pay, while employer contributions increase the company's payroll cost.

These are the main statutory items employers need to understand when processing payroll.

Each item follows different eligibility criteria, contribution rates and calculation methods.

This is why employers should calculate statutory deductions separately rather than applying a single percentage to an employee's salary.

For most Malaysian employees below 60 years old, the standard EPF contribution rates are:

Different contribution rates apply to certain employees aged 60 and above, permanent residents and non-Malaysian employees.

For eligible non-Malaysian employees under the newer contribution arrangements, the standard EPF rate is 2% for employees and 2% for employers.

Employers should follow the official Third Schedule instead of relying only on percentage calculations.

SOCSO and EIS are administered by PERKESO.

The SOCSO First Category generally covers eligible employees below 60 years old, with contributions from both employees and employers.

The Second Category generally covers employees aged 60 and above, with the standard Employment Injury contribution paid by the employer.

EIS generally applies to eligible employees aged 18 to 60, subject to statutory exclusions.

Both SOCSO and EIS use a monthly contribution wage ceiling of RM6,000.

This means employees earning more than RM6,000 are generally assessed using the applicable maximum contribution band.

Employers should also check whether LINDUNG 24 Jam contributions apply.

PCB stands for Potongan Cukai Bulanan, commonly known as Monthly Tax Deduction.

Employers deduct PCB from eligible employees' remuneration and remit the amount to LHDN.

PCB is not calculated using a single flat percentage.

The amount can depend on the employee's annual income, tax residency, marital status, children, eligible reliefs, additional remuneration and previous employment information.

For example, two employees earning the same monthly salary may have different PCB deductions because their tax circumstances are different.

Employers should refer to the official LHDN PCB calculation specification for 2026 when processing payroll.

These three figures are important when preparing payroll.

Gross Salary: The employee's earnings before applicable deductions.

Net Salary: The amount remaining after employee deductions and applicable tax withholding.

Employer Payroll Cost: Gross salary plus the employer's statutory contributions and any other employer expenses.

For example, an employee earning RM5,000 may receive less than RM5,000 after deductions, while the employer's total cost may exceed RM5,000.

Understanding these differences helps businesses budget for salaries and avoid confusion when reviewing payroll reports.

Payroll calculations for foreign employees can differ from those for Malaysian citizens.

Employers need to consider the employee's residency status, EPF membership category, PERKESO eligibility and applicable income tax treatment.

Eligible non-Malaysian employees are generally subject to EPF contributions under the applicable rules introduced for October 2025 wages.

PERKESO contribution requirements also apply to eligible foreign workers, including relevant protection schemes.

Income tax treatment may differ depending on whether the employee is a Malaysian tax resident or non-resident.

Before processing payroll, employers should verify the employee's eligibility and contribution category.

Payroll mistakes often happen when employers use the wrong contribution category or overlook additional remuneration.

Some common issues include:

• Calculating EPF using a simple percentage instead of the official contribution schedule.
• Applying the wrong SOCSO category for an employee's age or eligibility.
• Forgetting to include applicable EIS or SKBBK contributions.
• Using an incorrect wage basis for allowances, bonuses or overtime.
• Calculating PCB without considering relevant tax information.
• Deducting employer statutory contributions from employee salary.
• Failing to update payroll calculations when official contribution rules change.

Reviewing these details before finalising payroll can help reduce errors and employee questions.

Manually calculating payroll can take time, especially when multiple statutory contributions are involved.

Our free Payroll Calculator Malaysia helps you estimate salary deductions and understand employer contribution costs in one place.

It can be useful when checking payroll figures, comparing salary scenarios, preparing employee cost estimates or reviewing statutory deductions.

You can calculate payroll estimates without purchasing software or creating an account.

For businesses managing larger teams, dedicated payroll software may provide additional features such as employee records, payroll approvals, payslips, statutory reports and payroll history.

Whether you're a small business owner, HR manager, accountant or employee, understanding payroll calculations makes salary planning easier.

Use our free Payroll Calculator Malaysia to estimate employee deductions, take-home salary and employer statutory costs based on the information supported by the calculator.

Enter your payroll details above and review your estimated calculation.

Try our free Malaysia payroll calculator today.