14th October 2026 - 3 min read
Elderly care fees carry 8% service tax today. From 1 January 2027, the rate drops to 6%, according to the Budget 2027 speech tabled on 9 October.
Fees of up to RM96,000 per person a year, or RM8,000 a month, will be exempt at centres registered under two Acts, according to the tax measures.
The exemption covers elderly care centre services from providers registered under the Care Centres Act 1993 or the Private Aged Healthcare Facilities and Services Act 2018. The measure names registered care centres and doesn’t mention home care, so don’t assume paying a carer at home qualifies. Ask your care home which registration it holds and whether it charges service tax today.
A home charges service tax only if it’s registered for it, and the registration threshold for elderly care centres stays at RM500,000. Some homes may charge none today.
The speech doesn’t say whether the 6% rate applies to the whole fee or only the part above RM96,000. The tax measures only say that fees above RM96,000 per person a year are taxed at 6%. All of this is still a proposal until it becomes law.
Take a home charging RM10,000 a month, or RM120,000 a year. Today, 8% service tax on that is RM9,600. If 6% applies to the whole fee, the tax is RM7,200, a saving of RM2,400. If it applies only to the RM24,000 above the cap, the tax is RM1,440, a saving of RM8,160. This is our illustration.
DOSM’s old-age dependency ratio was 11.9 in 2026, up from 11.4 in 2025. That means 11.9 people aged 65 and above for every 100 people aged 15 to 64. By our calculation, that’s about 8.4 working-age people for each person aged 65 and above, down from about 8.8.
About 4.2 million people are aged 60 and above in 2026, or 12.3% of the population, according to DOSM. A woman aged 60 can expect to live another 21.7 years, and a man another 18.9 years, according to DOSM life tables. That means care may need funding for a long time, with fewer working-age relatives to share the cost.
The allocation for senior citizens’ assistance rises to RM1.3 billion for nearly 200,000 recipients, according to the Budget 2027 speech. The Ministry of Women, Family and Community Development said the money goes to Bantuan Warga Emas, which pays RM600 a month.
To qualify, you must be a Malaysian aged 60 and above, with household income at or below the hardcore poverty line, or PGK miskin tegar. You also can’t live in an institution run by the Department of Social Welfare (JKM). You can apply through the eBantuan portal.
Income tax relief for expenses on parents and grandparents is currently capped at RM8,000 a year. Budget 2027 proposes to cover all care expenses from the 2027 year of assessment, whether at home, in day care, or in a care home. The proposal doesn’t mention the RM8,000 limit. You’d claim the relief when you file your 2027 income in 2028.
The proposal also drops the need for a doctor’s letter. You’d need a written declaration from the carer, or a copy of their work permit, plus receipts. The carer can’t be you, your spouse, or your children.
If you pay for a parent’s care, keep every care bill and receipt. You’ll need them if you claim the parental care relief.
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Iman writes about personal finance with curiosity. She is interested in the stories behind money, the hesitation around big decisions, and the small habits that shape financial futures. Off the clock, she is either dissecting a film or climbing her way up the leaderboard in her favourite games.
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