Learning how to calculate net salary Malaysia employers actually owe isn’t hard once you know the formula, but EPF, SOCSO, EIS and PCB trip up a lot of new employers. Here’s the full breakdown.
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How to Calculate Net Salary Malaysia: The Basic Formula
Net Salary = Gross Salary – (Employee EPF + Employee SOCSO + Employee EIS + PCB)
Each of these components has its own rate and calculation method, so let’s break them down individually.
1. EPF (KWSP) Contribution
For employees under 60, the standard employee contribution rate is 11% of gross salary, with employers contributing 12-13% depending on the salary tier. Employees can also opt to contribute more voluntarily.
2. SOCSO (PERKESO) Contribution
SOCSO contributions are calculated based on the official contribution schedule, with the employee’s share typically around 0.5% of monthly salary.
3. EIS (Employment Insurance System)
EIS is a separate contribution from SOCSO, with a rate of 0.2% of salary for the employee’s portion (and another 0.2% from the employer).
4. PCB (Monthly Tax Deduction)
This is income tax withheld directly from salary each month, based on LHDN’s official PCB schedule. The amount depends on salary level, marital status, number of dependents, and any tax reliefs the employee is eligible to claim.
Official references
Rules, rates and deadlines change. Always confirm against the agency before you file.
A Simple Example to Calculate Net Salary Malaysia
For example, for an employee with a gross salary of RM4,000 per month:
- EPF (11%): RM440
- SOCSO (~0.5%): RM20
- EIS (0.2%): RM8
- PCB: varies by schedule (estimated RM50-RM150 for this bracket)
Estimated net salary: RM4,000 – RM440 – RM20 – RM8 – PCB ≈ RM3,382 to RM3,482.
Why It Matters: Calculate Net Salary Malaysia Correctly
In short, getting statutory deductions wrong doesn’t just erode employee trust in your payroll process — it can also mean contributing the wrong amounts to EPF and SOCSO, which carries penalty risk for the employer.
If your business still calculates payroll manually and you’re worried about errors, our team can help set up a more accurate, consistent process every month.
Current EPF, SOCSO & EIS Rates (2026)
These are the official rates in force right now — worth double-checking your payroll against these, since a lot of employers are still working off older figures:
- EPF: employees under 60 contribute 11% of salary, Malaysian citizen employees aged 60 and above contribute 0% — no employee share — while employers still pay a flat 4% (no wage ceiling). Employers contribute 13% for salaries up to RM5,000, and 12% above RM5,000, for employees under 60. (The 5.5%/6.5%/6% rate sometimes quoted elsewhere only applies to permanent residents or non-citizens registered before 1 August 1998 — not ordinary Malaysian citizens.)
- Account 3 (Flexible Account): since 11 May 2024, new EPF contributions are split 75:15:10 across the Retirement, Sejahtera and Flexible Accounts — the Flexible Account can be withdrawn any time for emergencies.
- SOCSO: the contribution wage ceiling is now RM6,000 (raised from RM5,000 in late 2024). Rates follow the official contribution schedule rather than a flat percentage, but at the ceiling, employers pay roughly 1.73% and employees roughly 0.5%.
- EIS: 0.2% of salary from the employee and another 0.2% from the employer, using the same wage ceiling as SOCSO.
Always check the latest official schedule when running payroll — do not rely on older articles that still reference the RM5,000 SOCSO ceiling.
Worked Examples by Salary Level
To make this concrete, here are estimated employee-side deductions (EPF, SOCSO, EIS — excluding PCB, since that depends on individual tax status) at a few common salary levels:
- RM2,500 salary: EPF RM275, SOCSO+EIS approx. RM12-15 — estimated net pay before PCB ≈ RM2,210-2,215.
- RM4,000 salary: EPF RM440, SOCSO+EIS approx. RM25-30 — estimated net pay before PCB ≈ RM3,530-3,535.
- RM6,000 salary (SOCSO/EIS ceiling): EPF RM660, SOCSO at the official ceiling rate RM29.75, EIS roughly similar — estimated net pay before PCB ≈ RM5,280.
- RM8,000 salary: EPF RM880 (the employee rate stays 11% regardless of salary tier — only the employer rate changes), SOCSO+EIS capped at the RM6,000 ceiling rate (~RM60 combined) — estimated net pay before PCB ≈ RM7,060.
PCB will reduce these figures further depending on the employee’s tax status — use LHDN’s official e-PCB Calculator for an exact figure for your situation.
Common Mistakes Employers Make
A few mistakes we see often when employers calculate net salary:
- Applying EPF/SOCSO/EIS to allowances that should actually be excluded (e.g. certain travel or meal allowances) — this over- or under-contributes.
- Forgetting to adjust once a Malaysian citizen employee turns 60 — the employee EPF contribution drops to 0% (not 5.5%, a common misconception), while the employer still contributes a flat 4%.
- Still using the old RM5,000 SOCSO/EIS ceiling instead of the current RM6,000.
- Leaving bonuses or commissions out of the PCB calculation for that month — LHDN treats these as taxable salary.
Need Help Managing Payroll?
Once payroll gets more complex — more headcount, mixed salary, bonus and allowance structures — it is usually safer to have a firm that keeps every statutory deduction (EPF, SOCSO, EIS, PCB) accurate every month. Check our accounting and payroll services, or read more on CP22/CP22A forms for employers.
For a quick estimate of your own net salary and EPF/SOCSO contributions, try SASCO’s free EPF & SOCSO Salary Calculator.
Frequently Asked Questions
What is the formula for calculating net salary in Malaysia?
What is the standard EPF contribution rate for employees?
What is the SOCSO contribution rate for employees?
What determines the PCB deduction amount?
What is the risk of miscalculating statutory deductions?
What is EPF Account 3 (Flexible Account)?
What is the current SOCSO and EIS wage ceiling?
Do bonuses count towards EPF and PCB?
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