Best Income Range for Income Tax planning

Income tax act mentions that Income Tax Rates For Resident Individuals (personal income tax ) With Effect from Year of Assessment 2002 is as follow

Chargeable Income	RM	Rate	Tax (RM)
On the first	2,500	0%	0
On the next	2,500	1%	25
On the first	5,000	-	25
On the next	15,000	3%	450
On the first	20,000	-	475
On the next	15,000	7%	1,050
On the first	35,000	-	1,525
On the next	15,000	13%	1,950
On the first	50,000	-	3,475
On the next	20,000	19%	3,800
On the first	70,000	-	7,275
On the next	30,000	24%	7,200
On the first	100,000	-	14,475
On the next	50,000	27%	13,500
On the first	150,000	-	27,975
On the next	100,000	27%	27,000
On the first	250,000	-	54,975
Exceeding	250,000	28%	-

view full info from Lembaga Hasil Dalam Negeri

So income tax calculation is as simple as determining your chargable income after minusing all the income tax deduction you are eligible for.

After calculating the actual paying tax verse your chargable income, you can find out the actual effective income tax rate you are paying. Below show a list of effective tax rate

income	tax	effective rate
2500	0	0.00%
5000	25	0.50%
7500	100	1.33%
10000	175	1.75%
12500	250	2.00%
15000	325	2.17%
17500	400	2.29%
20000	475	2.38%
22500	650	2.89%
25000	825	3.30%
27500	1000	3.64%
30000	1175	3.92%
32500	1350	4.15%
35000	1525	4.36%
37500	1850	4.93%
40000	2175	5.44%
42500	2500	5.88%
45000	2825	6.28%
47500	3150	6.63%
50000	3475	6.95%
52500	3950	7.52%
55000	4425	8.05%
57500	4900	8.52%

The obvious fact is that the more your chargable income is, the more tax you pay.

However, there is a small 'gap jump' due to the way the tax rate is implemented, so called step rate.

The blue graph shows the effective tax rate you pay based on your chargable income on X axis.

The bar belows shows the differences between 2 effective tax rate, or so call the increase gap.

Basically it means if your chargable income suddenly go above certain range, your effective paying rate will S U D D E N L Y increase more than usual as shown in the pink bar above.  Namely everytime when it goes beyond the step income, ie. RM 5,000 RM 20,000 RM 35,000 etc.  However this gap increase becomes less significant when it goes beyond RM 35,000.

If you look carefully at the effective income tax rate graph, you may observe it has a curve pattern like below.

This curve confirms that the B E G I N I N G of the curve has a S T E E P E R rate than the E N D of the curve.

So the B E S T income for your income tax planning is when your chargable income is close to but not exceed 

RM 5,000

RM 20,000

RM 35,000 etc.

The W O R S T income is when you go slightly beyond;

RM 5,000

RM 20,000

RM 35,000 etc.

So when you are in the worst category, perhaps you can buy more books or donate some money ?