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B40, M40 and T20: A Closer Look at Malaysia's Income Groups

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In Malaysia, when it comes to income distribution and social class categorisation, there are three distinct income tiers – B40, M40, and T20. This article will delve into both household incomes and the median income in the country.

B40 M40 and T20 income classification in Malaysia
© abdulrazaklatif/ 123RF

As of 2022, there are a total of 8.4 million households in Malaysia, of which 7.9 million are Malaysian citizens. These figures are based on the 2022 Household Income Survey conducted by the Department of Statistics Malaysia (DOSM).

A household refers to one or a group of related or unrelated individuals who typically live together and share resources for food and other living expenses. In Malaysia, 97.9% of households are family units, while 2.1% are non-family units.

So, we often hear about the terms B40, M40, and T20, but who exactly fits into these income classes? While we are all classified according to our income levels, it is critical to understand where we fall within the B40, M40, and T20 income categories.

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What is household income?

DOSM defines household income as the total income received by household members, either in cash or in kind, on a regular and accrual basis, whether weekly, monthly, or annually, and can be used to meet current living expenses.

What is the average household income in Malaysia?

The average urban household income in 2022 is RM9,428, a 2.9% rise from RM8,635 in 2019. Meanwhile, the average rural household income in 2022 is RM5,147, showing a 0.9% growth from RM5,004 in 2019.

What are B40, M40, and T20?

B40, M40, and T20 refer to the classification of household income groups in Malaysia. B40 represents the bottom 40% of income earners, M40 represents the middle 40%, and T20 represents the top 20% of Malaysian household incomes. Here are the findings from the 2022 survey:

Income ClassificationDefinitionDetails
B40Bottom 40% incomeLow-income individuals.Household income less than RM5,250.Represents 3.16 million households
M40Middle 40% incomeMiddle-class income individuals.Household income between RM5,251 and RM11,819. Represents 3.16 million households.
T20Top 20% incomeHigh-income individuals.Household income of RM11,820 or more.Represents 1.58 million households.

Household income classification in Malaysia 2023

B40 is further subdivided by B1, B2, B3, and B4; M40 income into M1, M2, M3, and M4; and T20 into T1 and T2. Household income is calculated based on median and mean values.

Source: Household Income Survey Report 2022

The median income is the middle value when households are arranged from lowest to highest income, whereas the mean income is determined by adding all household incomes and dividing by the number of households.

Income Group Median Household Income (RM)Mean Household Income (RM)Income Threshold (RM)
B40B12,0121,941Less than 2,560
B40B23,0343,0182,560 – 3,439
B40B33,8753,8743,440 – 4,309
B40B44,7644,7714,310 – 5,249
M40M15,7705,7825,250 – 6,339
M40M26,9796,9896,340 – 7,689
M40M38,5238,5367,690 – 9,449
M40M410,55210,5779,450 – 11,819
T20T113,47513,58511,820 – 15,869
T20T220,77625,71915,870 and above

B40 and their eligible assistance

The B40 category represents the bottom 40% of household incomes in Malaysia, consisting of 3.16 million households earning less than RM5,250. Among the assistance or incentives available to the B40 group are:

  • Sumbangan Tunai Rahmah (STR) – Cash aid for low-income households (B40).
  • MADANI Medical Scheme – Created to cover the healthcare needs of the B40 group for Primary Acute Care (Outpatient Treatment of Acute Cases) in 21 districts.
  • Jaringan Prihatin B40 – RM300 support for purchasing new devices and RM180 for monthly data subscriptions.
  • Bantuan Kanak-Kanak (BKK) – Assists families/caregivers of children or assists children without/gaining caregivers to continue living with their families and ensure their well-being.
  • Bantuan Warga Emas – RM500 monthly stipend for the poorest elderly citizens (warga emas miskin tegar).
  • mySalam – A free takaful health protection initiative.
  • Program Perumahan Rakyat Termiskin – Targeted at those who want to build new houses or renovate existing ones for occupancy and require assistance.
Source: Household Income Survey Report 2022

M40 and their eligible assistance

The M40 category represents the middle 40% of household incomes in Malaysia, consisting of 3.16 million households with incomes ranging from RM5,251 to RM11,819. Among the assistance or incentives available to the M40 income group are:

  • Income tax rate reduction of up to 2% beginning in 2024 for those with taxable incomes between RM35,000 and RM100,000.
  • Stamp duty exemption of up to 100% for first-time home purchase priced at RM500,000 and below.
  • Stamp duty exemption of up to 75% for first-time home purchases priced between RM500,001 and RM1 million.
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B40, M40, and T20 income classifications are to be phased out in 2024

Beginning in 2024, the classification of the population into B40, M40, and T20 income categories will be gradually phased out. According to Minister of Economy Rafizi Ramli, this action is taken to shift subsidies and socio-economic policies towards household disposable income.

What is the monthly income required to live comfortably in Malaysia?

A comfortable life is subjective and depends on each individual’s unique lifestyle. Aside from that, the factors influencing a comfortable life for Malaysians include the location of your residence or workplace.

According to the local job site Ricebowl.my, the cost of living in Malaysia’s five major states is as follows:

  • Kuala Lumpur = RM4,500 to RM7,500 per month
  • Penang = RM3,500 to RM6,000 per month
  • Selangor = RM3,000 to RM5,000 per month
  • Johor = RM2,500 to RM4,000 per month
  • Sabah = RM2,000 to RM3,500 per month.

Disclaimer: The information is provided for general information only. iProperty.com Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

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Frequently Asked Questions About the Income Classifications in Malaysia

The income categories in Malaysia are denoted by T20, M40, and B40. B40 signifies the lowest 40% of earners, M40 indicates the middle 40%, and T20 represents the uppermost 20%.
B40 corresponds to the lower 40%, encompassing households with lower income levels, below RM4,850 per month. The M40 category pertains to the middle 40%, constituting middle-income households with earnings ranging from RM4,851 to RM10,960 monthly. The T20 segment designates the upper 20%, representing the affluent class with household incomes surpassing RM10,960 per month.
Salaries in Malaysia are considerably diverse based on job roles and industries. The anticipated annual average salary for the year 2023 is RM78,480, including supplementary perks such as housing and transportation provisions.