Malaysian payroll deductions: EPF, SOCSO, EIS, PCB & the HRD levy

Running payroll in Malaysia means handling five separate statutory obligations every month, each with its own rate, its own wage ceiling, its own portal and its own legal authority. Get one wrong — an under-contributed EPF, a missed SOCSO band, a late PCB — and the employer, not the employee, carries the penalty. This guide sets out all five mandatory payroll deductions and the 2026 employer contribution rates in one place, with every figure tied to the responsible Malaysian authority: KWSP, PERKESO, LHDN and HRD Corp. Carriera is a compliance-focused recruitment and training partner — payroll and Employment Act literacy is one of our four differentiators — so this is the same reckoning we apply when we place and price talent for clients across Peninsular Malaysia.

What are the mandatory payroll deductions and employer contribution rates in Malaysia for 2026?

There are five: EPF, SOCSO, EIS, PCB (Monthly Tax Deduction) and the HRD Corp levy. The table below is the single reference for who pays, the rate, the wage ceiling and the deadline. EPF, SOCSO and EIS are shared between employer and employee; PCB is withheld from the employee's pay only; the HRD levy is borne entirely by the employer. See our glossary for plain-language definitions of each acronym.

SOCSO and EIS are taken from PERKESO's fixed contribution schedule by wage band, so the exact ringgit amount comes from the schedule rather than a flat percentage of exact salary; the percentages shown are the effective First-Category rates. EPF for wages up to RM20,000/month is likewise computed from the Third Schedule bands. Rates current as at June 2026.

What is the EPF employer contribution rate in Malaysia?

The EPF (KWSP) employer rate is 13% of monthly wages for employees earning RM5,000 or below, and 12% for employees earning above RM5,000. The standard employee rate for members under 60 is 11%. For wages up to RM20,000 a month, the exact amount is read from the fixed bands in the Third Schedule of the EPF Act 1991 rather than multiplied directly, per KWSP's mandatory-contribution guidance and the EPF Act 1991 Third Schedule.

Two practical notes for employers. First, the rate split is by the employee's wage, not their seniority — the 13%/12% line sits at RM5,000. Second, rates differ for members aged 60 and above and for non-citizens, so a single payroll run can legitimately carry several EPF rates; always read the current Third Schedule rather than assuming one number applies to everyone.

What are the SOCSO and EIS rates and wage ceiling?

SOCSO (PERKESO) First-Category contribution is about 1.75% employer + 0.5% employee, covering the Employment Injury and Invalidity Schemes. EIS is 0.2% from the employer and 0.2% from the employee. Both are capped at an insured-wage ceiling of RM6,000 a month, raised from RM5,000 effective 1 October 2024, so an employee earning above RM6,000 is contributed on RM6,000. These figures are set by PERKESO's rate-of-contribution schedules under the Employees' Social Security Act 1969 (Act 4) and the Employment Insurance System Act 2017 (Act 800).

The First Category applies to employees below 60. A Second Category (employees aged 60 and over, who generally no longer contribute the employee share to the invalidity scheme) carries a different employer rate, so age is the trigger to check before you finalise SOCSO for an older worker.

How does PCB (Monthly Tax Deduction) work?

PCB — Potongan Cukai Bulanan, officially the Monthly Tax Deduction (MTD) — is Malaysia's pay-as-you-earn income-tax withholding. Under Section 107 of the Income Tax Act 1967, the employer must compute, deduct and remit PCB from each eligible employee's monthly pay to LHDN. It is not an employer cost: the employer is custodian of tax that belongs to the employee. The calculation method is set out in LHDN's 2026 MTD computerised-calculation specification.

The amount withheld depends on the employee's chargeable income, marital status, number of children and approved deductions — not a flat rate. Payroll software applies LHDN's MTD formula; employers without computerised payroll can use e-PCB Plus on the MyTax portal. PCB is then remitted by the 15th of the following month, in line with EPF, SOCSO and EIS.

What is the HRD Corp levy and who pays it?

The HRD Corp levy is a statutory training levy under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001, paid entirely by the employer. Employers with 10 or more Malaysian employees in covered sectors must register and pay 1% of each local employee's monthly wages; employers with 5 to 9 employees may register voluntarily at 0.5%, per HRD Corp's PSMB Act 2001 page. Unlike EPF or SOCSO, nothing is deducted from the employee.

The levy is not a sunk cost: it funds claimable training. Through the SBL-Khas scheme, employers can draw on their accumulated levy to pay for approved courses. We explain the mechanics in our HRD Corp levy guide and SBL-Khas explainer. Carriera Academy is an HRD Corp Approved Training Provider, so programmes — including the payroll and Employment Act course below — can be funded from your own levy rather than fresh budget.

How much does an RM4,000 employee actually cost the employer?

Take a Malaysian citizen under 60 on a gross salary of RM4,000 a month. On top of the RM4,000 the employer pays statutory contributions of roughly RM637, an on-cost of about 15.9% before any bonus, benefit or leave. PCB does not appear here because it is withheld from the employee, not added by the employer. The build-up:

SOCSO and EIS ringgit figures are the scheduled amounts for the RM4,000 wage band from PERKESO's contribution table; the percentages are indicative. The HRD levy applies only if the employer is registered (10+ employees, or 5–9 voluntarily). EPF for some members aged 60+ or non-citizens differs.

So an RM4,000 hire is really an ~RM4,637 monthly commitment in statutory terms — useful to know before you sign off a salary band. We work through the wider picture (notice, leave, EPF, SOCSO and the cost of a mis-hire) when we advise clients on offers through our recruitment service.

When must payroll deductions be paid, and through which portal?

All five statutory items share one deadline: the 15th of the following month. Each, however, has its own submission channel. Miss the date and late-payment interest or penalties apply to the employer. The table below maps each deduction to its official remittance portal.

This guide is general information for Malaysian employers, not legal, tax or payroll advice. For binding figures refer to KWSP (EPF), PERKESO (SOCSO/EIS), LHDN (PCB/MTD) and HRD Corp directly. Rates current as at June 2026. Updated 18 June 2026.