The total budget allocation is RM470 billion. The government is committed to fiscal prudence, targeting a reduced fiscal deficit of 3.5% of GDP for the year, down from 3.8% projected for 2025.

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The SARA programme is significantly expanded with a total allocation of RM15 billion for STR and SARA. All nine million STR recipients will receive SARA aid of up to RM100 per month (RM1,200 annually). The government will also give an additional RM100 SARA to 22 million Malaysians aged 18 and above in mid-February 2026 for festive preparations.

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To ease the financial burden on the Indian community for the festive season:

📌 STR Payout: The Phase 4 payment of the Sumbangan Tunai Rahmah (STR), totalling RM2 billion, will be brought forward to 18 October (instead of November).

📌 Toll Discount: A 50% toll discount will be provided for two days in conjunction with the Deepavali celebrations for major highways.

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📌 Domestic Tourism: A special individual income tax relief of up to RM1,000 is granted for expenses covering entrance fees to local tourist centres and cultural programmes, in conjunction with Visit Malaysia Year 2026.

📌 Health: Individual tax relief for vaccination expenses is expanded to cover all vaccines officially registered and approved by the Ministry of Health.

📌 Sustainability: The tax relief of RM2,500 for EV-related purchases will be maintained, and a new relief is proposed for purchasing food waste composting machines.

📌 Childcare: The RM3,000 relief is expanded to cover registered daycare centres or transit centres for children up to age 12.

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The budget raises the official age limit for youth to 15 to 30 years old.

📌 Employability: RM200 million is allocated for the K-Youth programme for on-the-job training for 11,000 youths without degrees in strategic sectors.

📌 Skills: The government continues to fully fund the cost of obtaining a Class B2 motorcycle licence.

📌 National Service: RM250 million is provided for the new National Service Training Programme (PLKN 2026), including a pilot program at the higher education level.

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📌 Free Education: PTPTN will provide free education to 5,800 children from poor families studying at public universities, with an allocation of RM120 million annually.

📌 Loan Exemption: PTPTN repayments will be exempted for students from low and middle-income families who graduate with a First Class Honours bachelor's degree from public universities.

📌 Enforcement: The government will impose travel restrictions on financially able borrowers working abroad who default on their repayments.

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Measures are introduced to support working parents, women entrepreneurs, and vulnerable mothers:

📌 Childcare Tax Relief: The existing RM3,000 tax relief for childcare fees is expanded to cover registered transit centres for children up to age 12 (previously age six).

📌 Single Mothers: 5,000 poor single mothers will receive crucial support in obtaining legal aid for court cases, including divorce and child custody matters.

📌 Women Entrepreneurship: RM270 million in financing will be provided by Bank Rakyat, BSN, MARA, and SME Bank to support women micro, small, and medium-sized entrepreneurs.

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📌 Welfare: RM1.4 billion is allocated for OKU allowances (chronic, unemployed, and workers).

📌 Tax Relief: The individual tax relief for expenses on disability assessment/treatment for children under 18 is raised to RM10,000 (from RM6,000).

📌 Mobility: The MyRailLife Pass providing free train travel is expanded to the entire OKU community. Prasarana will provide 100 special mobility vans.

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A 40% increase in the On-Call Allowance for medical officers is provided. The government also announced a Bantuan Khas Kewangan of RM500 for civil servants (Grade 56 and below/contract) and RM250 for pensioners and veterans. Judges will receive a salary increase of up to 30%.

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The healthcare sector receives a total allocation of RM46.5 billion. The government announced a 40% increase in the on-call allowance (ETAP) for medical and dental officers, effective from 1 October 2025. Furthermore, 4,500 contract doctors will be offered permanent positions.

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Following the passing of the Gig Workers Act 2025, the budget introduces major incentives to strengthen the social safety net for the gig economy workforce:

📌 EPF Matching: The new i-Saraan Plus scheme provides gig workers (e-hailing, p-hailing) with a government matching contribution of up to RM600 a year (RM6,000 lifetime limit).

📌 SOCSO Subsidy: To facilitate mandatory social security contributions, the government will subsidise 70% of the Self-Employment Social Security Scheme contribution for first-time registrants.

📌 Transport Exemptions: The 100% excise duty and sales tax exemptions will continue for the purchase of new national cars (Proton and Perodua) by eligible taxi and private hire vehicle owners, reducing the cost barrier for transport operators.

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Targeted indirect tax measures are introduced to boost health initiatives:

📌 Duty Hike: Excise duties on cigarettes and alcoholic beverages will be increased by 10% (effective 1 Nov 2025).

📌 Revenue Use: The revenue generated will be channelled to fund the Health Ministry's initiatives, including treatment for lung, diabetes, and heart disease.

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Allocation for Sabah development increased to RM6.9 billion and Sarawak to RM6 billion. Total infrastructure projects (Pan Borneo, SSLR, LTB) cost RM48 billion. The SALAM Submarine Cable is funded with RM2 billion to improve digital connectivity.

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AI is a national priority, with nearly RM5.9 billion earmarked for RDCI. Key initiatives include a RM2 billion Sovereign AI Cloud and an additional 50% tax deduction for SMEs investing in recognized AI and cybersecurity training.

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The tourism sector receives over RM700 million to support the VM 2026 campaign, targeting 47 million visitors and RM329 billion in revenue. RM50 million in matching grants will encourage international flights and charters to Malaysia.

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