(TAX UPDATE) This Hire Is Tax Free for Working Women and Tax Deductible 50% More for Employer

She left work when her second baby arrived.
At that time, she thought,

“I will return soon.”
One year became two years.
Two years became three years.

Now, her youngest child has started school.
Household expenses are getting higher.

She is ready to work again.
But her confidence is not.
She looks at her CV and sees a three-year career gap.

The SME boss looks at the same CV and thinks,
“Three years never work. Can still perform or not?”

Perhaps both sides are looking at the wrong thing.

Because the Government is offering two tax benefits to bring them together.

One for the woman.
One for the employer.

If she qualifies, her employment income may be exempt from income tax for up to 12 consecutive months.

If the employer qualifies, the employer may claim an additional 50% tax deduction on her remuneration.

One hire.
Two tax benefits.

Let us start with the woman.

Under the Income Tax (Income of Approved Individual) (Women Returning to Work After Ceasing from Employment Temporarily) (Exemption) Order 2026, an approved woman returning to work may enjoy tax exemption on her qualifying gross employment income.

She may choose to start the exemption in the YA of application or the following YA.
This choice can matter when she returns to work halfway through the year.
But not every woman returning to work qualifies.

Generally, she must :

Be a Malaysian citizen and tax resident.
Have received no employment income for at least 24 consecutive months during the qualifying career break.
Have at least three years of full-time working experience before the break.
Be not more than 58 years old when applying.
Sign a full-time employment contract in Malaysia for at least 24 months.
Work for at least 12 consecutive months.
And earn gross employment income of at least RM5,000 per month.
The employment contract must be entered into between 1 January 2023 and 31 December 2028.

The application must be made to the Minister of Finance through TalentCorp by 31 December 2027.

If approved, she still needs to submit her income tax return.
Tax-exempt does not mean,
“No need to file tax.”

There is another restriction. If she already enjoyed the exemption under the previous 2019 Order, she cannot claim it again. It is a one-time benefit.

Now comes the employer’s side.

Assume the company pays her RM5,000 per month.
For 12 months, her remuneration is RM60,000.
Normally, the company claims RM60,000 as a business deduction.

Under the Income Tax (Deduction for Employment of Approved Individual) Rules 2026, the qualifying employer may claim another 50%.

Normal deduction … RM60,000.
Additional deduction … RM30,000.
Total deduction … RM90,000.

Some people call this a double deduction.

Technically, it is not.
The total deduction is 150%.
Not 200%.

The additional deduction is available for up to 12 consecutive months.

The employer must also satisfy the conditions imposed by the Minister, with compliance verified by TalentCorp.

This incentive is intended for genuine third-party hiring.

A sole proprietorship does not qualify.
A company controlled directly or indirectly by the returning woman is also excluded.
Employment by certain relatives, including parents, children, siblings, grandparents and spouse, is excluded too.

Read the full story in our blog
https://www.ktp.com.my/blog/working-mother-tax-relief-2026/29july2026