In Malaysia, we have the B40, M40 and T20 income groups to understand how the government categorizes and addresses the economic needs of the population. These classifications have become the centerpiece of policy decisions, and in particular, of deciding whether or not to subsidize, or to provide financial assistance, or to foster equitable economic growth. With the country’s development, Malaysians need to know their place in this income structure, especially in 2025, when changes are expected in how income groups are classified and supported.
What are B40, M40, and T20 in Malaysia?
The classification system is based on the Household Income Survey conducted by the Department of Statistics Malaysia (DOSM) which is B40 (Household Income below RM5,250), M40 (Household Income between RM5,250 and RM11,819) and T20 (Household Income above RM11,819). The population is segmented by income level using these categories so that the government can target interventions. Here’s a breakdown of each group:
- B40 (Bottom 40%): The B40 group comprises households with the lowest 40% of income earners in Malaysia. Low income families who are struggling to get by, everyday, and live a decent standard of living. Often the government is targeting this group with social safety nets, subsidies, and financial aid.
- M40 (Middle 40%)Households in the M40 category have moderate income, that is, they are able to live on a basic standard of living, but would struggle to maintain their financial stability due to the rising cost of living. Most of these middle income earners are professionals, small business owners and skilled workers.
- T20 (Top 20%): The wealthiest households in Malaysia make up the T20 group. They are mostly high income earners, business owners, executives and people with great investment. In terms of standard of living, they live a higher standard and produce a disproportionate share of the nation’s economic output.
B40 Malaysia: The Bottom 40% Income Group
B40 Income Threshold:
Households in the B40 group have monthly incomes of less than RM5,250. According to the Household Income Survey 2022, the income distribution in Malaysia shows that around 3.16 million households fall into this category. This group often includes low-wage earners, workers in the informal sector, as well as rural communities.
What B40 Means for Malaysian Households:
The B40 group usually gets into financial straits and lacks the ability to achieve financial stability in the long term. This group of people are more likely to depend on government subsidies programs like direct cash aid, healthcare support and support for basic goods and services. Many households in this category are single income families or have multiple dependents, and are therefore harder to cope with rising living costs, especially in the urban areas.
Government aid for B40 households includes:
- Sumbangan Tunai Rahmah (STR): Cash assistance designed to help reduce the economic burden of low income families.
- MADANI Medical Scheme: A Health Insurance initiative offering coverage to primary healthcare services.
- Jaringan Prihatin B40: It will also provide financial support to B40 households to buy digital devices and to subsidize data subscriptions.
These programs are designed to improve the standard of living of those B40 group, helping them meet basic needs such as food, healthcare, and education.
M40 Malaysia: The Middle-Class Income Group
M40 Income Threshold:
Households in the M40 group earn between RM5,250 and RM11,819 per month. This includes 3.16 million households in Malaysia. The M40 group is often seen as the backbone of the nation’s economy, as it comprises a large portion of the working population.
Who Falls Under M40 Malaysia?
This group includes skilled professionals, teachers, small to medium business owners and mid level executives. The M40 Malaysia group is enjoying a moderate standard of living but struggle with high costs of housing, transportation and their children’s education. Urban areas are highly sensitive to changes in inflation and cost of living and this income bracket is very sensitive to changes in inflation and cost of living.
Government support for M40 households includes:
- Income Tax Rate Reduction: In 2025, the tax rate reductions for the M40 group will be up to 2% for taxable income ranging from RM35,000 and RM100,000.
- Stamp Duty Exemption: For RM500,000 and below, first time homebuyers in this group can enjoy stamp duty exemption of up to 100% for the properties.
- Affordable Housing Schemes: Financial aid for education, helping M40 households to buy their first homes.
Unlike the B40 group, the M40 group isn’t financially stressed but its members are economically pressured by rising cost of living and housing in cities such as Kuala Lumpur and Penang.
T20 Malaysia: The Top 20% Income Group
T20 Income Threshold:
Households in the T20 group earn more than RM11,820 per month. They are high income earners; the top 20% of income earners in Malaysia. This group includes 1.58 million households, according to the latest data.
Who Belongs to the T20 Group?
The T20 group is made up of very affluent people, including high level execs, business owners and investors. These households live a high standard of living, and have access to luxury goods, private education and comprehensive healthcare. The T20 Malaysia group also plays a key role in the nation’s economy, making a big contribution to GDP and tax revenues.
Government support for T20 households is minimal compared to B40 and M40 groups, as this segment of the population typically does not require financial aid. But they do get some of the policies that encourage investment, tax incentive for business and infrastructure development that improves the quality of life.
Household Income Breakdown in Malaysia (2022 – 2025)
The most recent data from DOSM’s Household Income Survey 2022 provides a detailed breakdown of income groups:
| Income Group | Income Range (RM/month) | Number of Households |
| B40 | Less than RM5,250 | 3.16 million |
| M40 | RM5,250 – RM11,819 | 3.16 million |
| T20 | RM11,820 and above | 1.58 million |
The government plans to phase out these income classifications in 2025 in favor of a more comprehensive disposable income measure. This will be a more accurate picture of real purchasing power of Malaysian households.
Why do these Income Classifications Matter?
Understanding the B40, M40, and T20 categories is crucial for several reasons:
- Policy Formulation: These classifications are used by the Malaysian government to design policies that meet the particular needs at each income level. For instance, cash aid may be given to B40 households and healthcare benefits to M40 households.
- Targeted Subsidies: These income classifications are often used to distribute programs such as fuel subsidies, electricity discounts and food aid so that support reaches those who need it most.
- Social Mobility: Understanding these income groups will allow Malaysians to learn about their position in the economy and what is possible for upward mobility through education, career development or entrepreneurship
The Future of B40, M40, and T20 Classifications
Malaysia will start phasing out B40, M40 and T20 income classifications to a system that factors in household disposable income by 2025. The move is a part of a more general attempt to take a more nuanced approach to socioeconomic policy. The new classification system will use wealth, assets and other forms of income (such as rental income, business income) to better understand an individual’s or a household’s financial status.
Conclusion: Understanding Malaysia’s Income Groups
B40, M40 and T20 classifications reveal Malaysia’s income distribution and the economic problems of the different segments of the population. This structure no matter if you are B40 Malaysia or M40 Malaysia or T20 Malaysia will give you an idea on where you are and how you can decide to save, invest and take up government assistance programs.
As the government tries its hand at economic support, these categories will change. The coming years will require Malaysians to stay informed of how these changes might affect their financial position, so that they can also get to take advantage of policies that promote financial security and social mobility.
