B40, M40, T20. and T15 in 2024: A Deep Dive into Malaysia’s Income Groups

According to the latest data from the Department of Statistics Malaysia (DOSM), there are 9.1 million households in Malaysia in 2024. These households are classified into distinct income groups: B40, M40, and T20.

When the government announces financial assistance for Malaysians, terms like "B40," "M40," and "T20" are frequently mentioned. But what do these categories really mean, and where do we fall within them?  Let’s take a closer look at how Malaysian households are classified.

The definition for household and household income

In Malaysia, households are classified into income groups—low, middle, or high—based on their position within the income distribution percentile of the population.

These categories are commonly referred to as B40, representing the bottom 40% of earners, M40, which covers the middle 40% or “middle class,” and T20, which consists of the top 20% of income earners.

For instance, a household is categorized as part of the T20 group if its income places it among the top 20% of earners in the country. Importantly, this classification is applied to households as a whole, rather than to individuals.

So, what exactly defines a “household”? The Department of Statistics Malaysia (DOSM) defines a household as “a group of related or unrelated individuals who live together and share common expenses for essentials such as food, shelter, and other necessities.”

When it comes to household income, DOSM defines it as “the total income received by a household member, whether in cash or in kind, on a regular basis—daily, weekly, monthly, or annually—that is used for living expenses.” This includes salaries, wages, business income, transfers, and any other recurring sources of income that contribute to the household’s financial resources.

What are B40, M40, and T20?

Based on the 2022 Household Income Survey conducted by the Department of Statistics Malaysia (DOSM), the average household income in Malaysia is RM 8,479, an increase of 2.4% from RM 7,901 in 2019.

The Department of Statistics Malaysia (DOSM) uses various surveys to classify households into income groups, specifically the B40, M40, and T20 categories. This classification is based on household income data from the Household Income and Basic Amenities Survey, conducted every few years. The survey takes into account factors like gross household income, living costs, and the number of household members.

The income brackets for B40, M40, and T20 are determined by the total monthly income of households. These groups can be broken down as follows:

• B40 (Bottom 40%): Households in this group are those with the lowest income levels, representing the bottom 40% of earners in Malaysia.
• M40 (Middle 40%): The middle-income earners, comprising the middle 40% of households.
• T20 (Top 20%): These are the highest-income households, representing the top 20% of earners.

This classification not only highlights income disparities but also guides resource allocation and policy-making to address the needs of each group.

Income level of B40, M40, and T20

The Twelfth Malaysia Plan (RMKe-12) prioritizes addressing poverty and fostering inclusivity under the principle of “leaving no one behind.” This strategy aims to ensure fair distribution of wealth and social justice, creating a prosperous and equitable Malaysia.

According to the 2022 Household Income Survey, the income thresholds for household groups are as follows:

• B40 (Bottom 40%): Households earning up to RM5,249
• M40 (Middle 40%): Households earning between RM5,250 and RM11,819
• T20 (Top 20%): Households earning above RM11,819

The classification of these income groups is updated periodically, reflecting changes in economic conditions, inflation, and living standards. The median income for each group also changes with time, reflecting the evolving economic landscape. Here’s a closer look at the income breakdown:

Are we looking at income disparity?

In 2022, T20 households accounted for 46.3% of total household income, a slight decrease from 46.8% in 2019. Meanwhile, M40 households held 37.6% of income, and B40 households accounted for just 16.1% of the total.

Survey findings highlight notable differences in income distribution within these groups:

• B40 households have a negatively skewed income distribution, with most households earning significantly below the average, pulling the mean income lower than the median.
• M40 and T20 households, however, show a positively skewed distribution, where a smaller proportion of high-income households pushes the mean income higher than the median.

For example:

• B40: Average income is lower than the median.
• M40: Average income is RM7,971, compared to a median of RM7,694.
• T20: Average income is RM19,652, while the median is RM15,867.

This highlights the concentration of income disparity, particularly among T20 households, where the majority earn less than the average due to a small group of extremely high earners.

Source: DOSM

Further breakdown of B40, M40, T20

The B40, M40, and T20 income groups are further divided into subcategories for a more detailed understanding of income distribution. B40 is split into B1, B2, B3, and B4, M40 into M1, M2, M3, and M4, and T20 into T1 and T2. 

This detailed breakdown allows for more precise interventions. For example, B1 households may require more substantial support than B4, while T1 may not have the same financial advantage as T2. Such granularity ensures resources are allocated effectively, addressing income disparities more accurately.

Are you actually B40, M40 or T20? It differs where you stay

The breakdown of B40, M40, and T20 classifications can vary significantly depending on where you live in Malaysia. Factors such as the cost of living and income distribution in different regions influence how households are categorized.

The income thresholds for B40, M40, and T20 households differ significantly between urban and rural areas due to differences in living costs and economic opportunities. For example, a household earning RM7,500 in an urban area is categorized as part of the M40 group, while in rural areas, a household with a similar income would be classified as T20 due to the lower income threshold in rural settings.

Source: DOSM

The income thresholds for B40, M40, and T20 households also vary depending on the state, reflecting differences in local economic conditions and standards of living. Wealthier states and federal territories like Selangor, Kuala Lumpur, and Putrajaya have significantly higher thresholds compared to other states.

For example, in Kuala Lumpur, a household is considered part of the T20 group if their income exceeds RM16,780 per month. Take a family where the husband earns RM9,000, the wife earns RM8,000; together, their total income of RM17,000 places them in the T20 category for the capital city.

Source: DOSM

Government financial aids for B40

The Malaysian government provides several forms of assistance to the B40 income group to help alleviate their financial burdens and improve their quality of life. Here are some of the key government aids available for the B40 group in Malaysia:

#1 Sumbangan Tunai Rahmah (STR)

Sumbangan Tunai Rahmah (STR) programme was launched to provide targeted financial assistance to the B40 community. This initiative, previously known as Bantuan Keluarga Malaysia, aims to ease the financial burden of low- and middle-income households, as well as senior citizens and individuals in need.

In 2024, the government increased STR allocations by 20%, from RM1.26 billion in the previous year to RM1.5 billion, benefiting 8.4 million Malaysians. Eligible recipients will receive cash payments ranging from RM100 to RM650, depending on household income, family size, and individual circumstances.

The STR programme distributes payments in four phases throughout the year to ensure continuous support:

• Phase 1: January 2024
• Phase 2: April 2024
• Phase 3: August 2024
• Phase 4: November 2024

Here’s everything you need to know about eligibility:

Households (Income RM0 – RM2,500):

• No children: RM150
• 1–2 children: RM300
• 3–4 children: RM500
• 5 or more children: RM650

Households (Income RM2,501 – RM5,000):

• No children: RM100
• 1–2 children: RM200
• 3–4 children: RM250
• 5 or more children: RM300

Senior Citizens Living Alone (Aged 60 and Above):

• Income RM0 – RM5,000: RM150

Single Individuals and Single OKU (Aged 21–59):

• Income RM0 – RM2,500: RM100

#2 Sumbangan Asas Rahmah (SARA)

The Sumbangan Asas Rahmah (SARA) is an additional aid programme for recipients of the Sumbangan Tunai Rahmah (STR) who are classified as Poor and Hardcore Poor under the eKasih system. Enhanced for 2024, SARA is designed to help cover the cost of essential items over the course of the year (January to December 2024). Eligible recipients receive RM1,200 or RM600 in non-cash aid, distributed at a monthly rate of RM100 or RM50 respectively, for 12 months.

The SARA programme has been expanded and improved in 2024 to better address the needs of recipients:

1. Broader Eligibility:
   Previously limited to Hardcore Poor recipients in 2023, SARA now includes households categorized as Poor and Hardcore Poor.
2. Increased Assistance:
   Households can now receive up to RM1,200, doubling the RM600 provided in 2023. The assistance for single individuals remains at RM600.
3. Expanded Use of Credits:
   SARA credits, initially limited to basic food items, can now be used for personal hygiene products, medications, and school supplies.

Eligible recipients are divided into categories with the following aid amounts:

1. Households:  Married couples or single parents with children: RM1,200
2. Elderly individuals without a partner: RM1,200
3. Single individuals: RM600

#3 PeKa B40

The Skim Peduli Kesihatan untuk Kumpulan B40 (PeKa B40) is an initiative by Malaysia's Ministry of Health (MoH) aimed at addressing the healthcare needs of the low-income B40 group, with a particular focus on non-communicable diseases (NCDs). This program offers several benefits to eligible individuals:

• Free Health Screenings: Recipients can undergo comprehensive health checks at registered clinics to detect NCDs early.
• Medical Device Assistance: Financial aid is available for medical devices, with coverage up to RM20,000, depending on the device category.
• Cancer Treatment Completion Incentive: An incentive of RM1,000 is provided to encourage patients to complete their cancer treatment plans.
• Transportation Subsidy: Up to RM1,000 is offered to assist with transportation costs for those receiving medical device assistance or cancer treatment.

Eligibility for PeKa B40 is automatic for recipients of the Sumbangan Tunai Rahmah (STR) and their registered spouses aged 40 and above. No separate registration is required. To access these benefits, eligible individuals can visit any clinic displaying the PeKa B40 logo and present their MyKad for verification.

#4 Program Perumahan Rakyat (PPR)

The Program Perumahan Rakyat (PPR) is a Malaysian government initiative designed to provide affordable housing for low-income groups, particularly the B40 community. One of the most attractive aspects of this program is the PPR rental scheme, where qualified applicants can rent a house for as low as RM124 per month.

The PPR program is divided into two components:

1. PPR Rental Scheme: Launched in 2002, this scheme provides rental homes to low-income earners at RM124 per month.
2. PPR Ownership Scheme: Offers an option to purchase homes at affordable prices.

The homes under the PPR rental scheme come with essential amenities and are designed to meet the needs of families:

Location and design:

• Urban areas: Apartment units in buildings between 5 and 18 floors.
• Suburban areas: Low-rise or single-unit houses.
• Minimum size: 700 square feet.

Facilities:

• 3 bedrooms, 1 living room, 1 bathroom, and 2 toilets.
• Community hall, surau, playground, and facilities for people with disabilities.
• Basic infrastructure such as kindergartens, shops, and waste disposal facilities.

To qualify for the PPR program, applicants must be Malaysian citizens; household income not exceeding RM3,000 per month, and neither the applicant nor their spouse own a property.

#5 Skim Jaminan Kredit Perumahan (SJKP)

The Skim Jaminan Kredit Perumahan (SJKP) is a government initiative designed to make home ownership more accessible, particularly for individuals with irregular incomes such as gig workers, small business owners, and farmers. By providing a loan guarantee to banks, the scheme allows these groups, who may struggle to secure financing due to the lack of a fixed income, to obtain housing loans.

This scheme is open to all Malaysian citizens aged 18 and above, making it an inclusive solution aimed at helping more Malaysians own a home, particularly the younger generation and low-income earners.

There are two primary options under the SJKP scheme:

• Standard SJKP Scheme: Mortgage financing of up to RM500,000 with loan tenure up to 35 years. Loan guarantee of over 100% financing.
• SJKP Madani: Mortgage financing including home improvements and furnishing; up to RM360,000, vovering up to 120% of home value. Loan tenure of up to 35 years.

#6 MySalam

MySalam is a health protection scheme launched to provide free takaful (Islamic insurance) coverage to eligible Malaysians, primarily targeting the B40 income group. This initiative offers financial relief to around eight million Malaysians, ensuring access to essential health coverage without burdening families with high costs during medical emergencies:

• Critical Illness Coverage: A one-time payout of RM8,000 is provided upon diagnosis of any of the 45 covered critical illnesses, offering vital financial assistance during challenging times.
• Daily Hospital Income Replacement: Beneficiaries receive RM50 per day of hospitalization, capped at 14 days annually (a total of RM700 per year).

The MySalam scheme caters specifically to the B40 group and includes:

• Individuals aged 18 to 65.
• Single individuals aged 40 to 65 with an annual income below RM24,000.
• Disabled individuals with an annual income below RM24,000.

Recent development: Taxing the rich, helping the poor?

In the recent 2025 budget, Malaysia aims to increase tax revenue by implementing targeted subsidy cuts for the top 15% of income earners (T15), referred to as the mahakaya (ultra-rich). The move, championed by Prime Minister Anwar Ibrahim, involves removing subsidies for petrol, education, and healthcare from the wealthiest households while retaining these benefits for the B40 and M40 groups.

Redefining subsidies for the wealthy

Anwar highlighted that 40% of the RM8 billion petrol subsidy for RON95 benefits foreign nationals and the wealthiest 15% of Malaysians. The government plans to redirect this subsidy to improve public services such as education, healthcare, and transportation.

However, defining the T15 group has sparked controversy, as the current income threshold of RM13,500 per month includes households that are middle-class in urban areas like Kuala Lumpur.

Challenges with T15 classification

Economists and opposition politicians argue that the T15 classification fails to account for household size, locality, and cost of living. Households in urban areas, which face higher expenses, are disproportionately impacted. For instance, in Kuala Lumpur, earning RM13,500 monthly barely qualifies as wealthy due to high living costs.

The Malaysian Institute of Economic Research estimates that 1.1 million households (or 4.3 million individuals) fall into this group, making up the top 15% of earners.

The government has framed subsidy cuts as targeting the wealthy elites, but critics warn this approach risks burdening middle-class families, particularly in urban areas. For example, families losing petrol subsidies could face additional fuel costs of RM1,000 to RM2,000 monthly, significantly increasing annual expenses.

New taxes and subsidy reforms

The 2025 budget also proposes several new tax measures, including:

1. Progressive Tax on Dividends: A 2% tax on dividends exceeding RM100,000 starting in 2025.
2. Expansion of Sales and Service Tax (SST): Scheduled to begin in May 2025.
3. Removal of Education Subsidies: Targeting prestigious government-backed schools, which primarily benefit wealthier families.

These reforms align with Malaysia’s goal of boosting tax revenue, which remains among the lowest in the region.

Calls for revision

Experts caution that relying solely on income thresholds to determine subsidy cuts may create societal divisions and damage national unity. Critics, including economist Dr. Muhammed Abdul Khalid, argue that subsidies for education and healthcare are constitutional rights, not luxuries.

To address these concerns, Economy Minister Rafizi Ramli stated that the government is reviewing income thresholds to include factors like locality and household size. Some economists, like Anthony Dass, recommend raising the T15 threshold to RM20,000, ensuring better alignment with the cost of living and reducing the financial strain on urban households.

What is T15?

The T15 income group refers to the top 15% of households by income in Malaysia. Introduced in Budget 2025, this classification builds on the existing T20 framework and focuses on households earning approximately RM13,000 or more per month.

The T15 subgroup is part of the government’s efforts to create targeted policies and implement subsidy reforms that reflect the economic diversity across different regions in Malaysia.

T15 vs. T20

While both groups represent high-income earners, the T15 classification narrows the focus within the T20 group for more precise targeting:

T15 income thresholds in Malaysia

The income range for T15 households starts at RM13,000 per month, but the threshold varies depending on the state. This difference is based on localized income levels. For example, T15 in Kuala Lumpur has a threshold of RM 19,005 while Johor’s is RM 13,387. 

Source: Majikan

Phasing Out B40, M40, and T20 Classifications in 2024

In 2024, Malaysia is set to phase out the traditional B40, M40, and T20 income group classifications, marking a shift in how economic well-being is assessed. Minister of Economy Rafizi Ramli announced that this change aims to provide a more accurate representation of financial conditions and move beyond fixed income brackets.

This decision comes in light of concerns that the current classifications do not account for other essential factors, such as household size, living costs, or regional economic differences, which can significantly impact disposable income and financial resilience.

The shift away from the B40, M40, and T20 system reflects the government's commitment to addressing income inequality through more nuanced metrics, potentially focusing on disposable income and wealth distribution.

This new approach could better capture the challenges facing households, especially as the economic landscape becomes increasingly complex due to inflation, wage stagnation, and rising costs of living.

The phasing out of these classifications in favor of more context-sensitive assessments is expected to bring a more equitable system that can help better address the disparities between Malaysia’s socio-economic groups.

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