Side Hustle Income Tax Malaysia 2026: What You Must Declare (And How to Do It)
It’s April 2026, which means one thing for a lot of Malaysians: tax season is in full swing. If you’ve been picking up extra income on the side — whether that’s freelancing, running a small online store, driving for Grab, or even monetising your TikTok — you might be wondering whether you actually need to declare it. The short answer is yes, you do. But don’t panic. Here’s everything you need to know to get it sorted without stress.
Who Needs to Declare Side Income in Malaysia?
LHDN (Lembaga Hasil Dalam Negeri) requires all Malaysian residents to declare their total income from every source, not just their main job. This includes:
Freelance work (graphic design, writing, coding, tutoring), e-hailing and food delivery income (Grab, Lalamove, foodpanda), online selling on platforms like Shopee and Lazada, rental income, content creation and influencer fees, commissions and affiliate earnings, and any other self-employment activity.
If your aggregate income — that’s your salary plus all side income combined — exceeds RM37,333 in YA2025, you are legally required to file. Even if you’re below that threshold, it’s good practice to file anyway, because you might be entitled to tax refunds.
Which Tax Form Do You Use?
This is where a lot of people get confused. The form you use depends on whether your side hustle is registered as a business or not.
Form BE is for resident individuals who earn employment income and do not carry on a business. If you do occasional freelance work and haven’t registered a sole proprietorship or enterprise, you’ll likely use Form BE. The deadline for Form BE is 30 April 2026.
Form B is for resident individuals who carry on a business — meaning you’ve registered your side hustle as a sole proprietor or partnership, or LHDN classifies your activity as a business by its regularity and scale. The deadline for Form B is 30 June 2026.
Not sure which one applies to you? Here’s a simple rule of thumb: if you received a consistent stream of freelance or side income throughout the year and it’s a recurring activity, LHDN may classify it as business income, meaning you’d file Form B. If it was a one-off gig or occasional work, Form BE is typically sufficient. When in doubt, consult a licensed tax agent.
How to Declare Side Income Step by Step
The process is done through LHDN’s MyTax portal (mytax.hasil.gov.my). Here’s a simplified walkthrough:
Step 1 — Log in to MyTax. Use your MyKad number or tax file number. First-time filers need to register an account first.
Step 2 — Select e-Filing. Under the e-Filing section, choose the correct form (Form BE or Form B for YA2025).
Step 3 — Enter your income details. For salaried employees, your EA form from your employer will auto-populate your employment income. You’ll then need to manually enter your side income in the relevant fields. For Form BE, look for “Other Income” or “Statutory Income from Business” sections.
Step 4 — Claim your deductions and reliefs. This is where you can reduce your tax bill. Business expenses directly related to your side hustle can be deducted — things like equipment, software subscriptions, a portion of your mobile bill, and platform fees. Common personal reliefs like EPF contributions, life insurance, and medical expenses also apply.
Step 5 — Review and submit. Double-check all figures, then submit. If you owe tax, you can pay via FPX bank transfer directly through the portal. If you’re owed a refund, it’ll typically be credited to your bank account within a few weeks.
Tax Rates for YA2025 (What You’ll Actually Pay)
Malaysia uses a progressive tax system. Here’s a simplified summary of the key brackets for residents in YA2025:
| Chargeable Income (RM) | Tax Rate |
|---|---|
| Up to 5,000 | 0% |
| 5,001 – 20,000 | 1% |
| 20,001 – 35,000 | 3% |
| 35,001 – 50,000 | 8% |
| 50,001 – 70,000 | 13% |
| 70,001 – 100,000 | 21% |
| Above 100,000 | 24%–30% |
Your chargeable income is calculated after all deductions and reliefs are applied. So even if your gross income looks high, what you actually pay tax on could be significantly lower.
What Expenses Can You Deduct as a Side Hustler?
If your side income is classified as business income (Form B), you’re allowed to deduct expenses that were wholly and exclusively incurred to generate that income. Examples include:
A laptop or equipment purchased for your work, software tools and subscriptions, a portion of your broadband or mobile bill if used for work, platform fees or commission charged by marketplaces, travel expenses directly related to fulfilling a job, and professional development courses.
Keep your receipts. LHDN doesn’t require you to submit them upfront, but you need to hold onto them for at least 7 years in case of an audit.
Where to Keep Your Side Hustle Money
A practical tip many people overlook: keep a separate bank account for your side hustle income and expenses. It makes record-keeping much easier when tax season comes around, and it stops you from accidentally spending money you owe to LHDN.
A digital savings account is a great option for this. Something like Versa lets you park your side income somewhere that earns decent daily interest while you’re setting it aside for tax payments.
What Happens If You Don’t Declare?
Ignoring side income on your tax return is not worth the risk. LHDN has been ramping up enforcement in recent years, and they do cross-check data from platforms, banks, and third-party sources. Penalties for under-reporting income can range from fines of up to 200% of the tax underpaid, to prosecution in serious cases. It’s simply not worth it.
Frequently Asked Questions
Do I need to declare income from selling on Shopee or Lazada?
Yes. If you are regularly selling goods online and earning income from it, LHDN considers this taxable income. Occasional sales of personal items (like clearing out old clothes) are generally not taxable, but if it’s a regular business activity, it must be declared.
I’m a fresh grad with a side hustle — what’s the minimum income before I need to file?
You are required to file if your aggregate income from all sources exceeds RM37,333 for YA2025. However, even if you’re below this threshold, you should still file if you want to claim tax refunds from PCB (monthly tax deductions) that your employer has already deducted on your behalf.
Can I claim relief on my EPF contributions from my side hustle income?
If you voluntarily contribute to EPF as a self-employed person, those contributions can be claimed as a deduction under the EPF/life insurance relief category, up to the applicable limit. This is a great way to reduce your tax bill while also building your retirement savings.
What if I earn income in foreign currency from overseas clients?
Foreign-sourced income received in Malaysia by Malaysian residents is generally exempt from income tax under current rules. However, this is a nuanced area and the rules have been evolving, so it’s worth verifying with a licensed tax consultant or checking LHDN’s latest guidelines.
If you’re managing client payments from overseas, using a service like Wise can save you a lot on currency conversion fees compared to traditional bank transfers. Sign up on Wise for a fee-free first transfer.
Tax season doesn’t have to be stressful. Get your documents together, log in to MyTax, and tick it off your to-do list before 30 April. And if your side hustle has been growing — congratulations, you might want to read our post on [INTERNAL_LINK: how to invest your first RM1000 in Malaysia] once you’ve sorted your taxes.
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