B40, M40, T20 and T15 Income Classification in Malaysia 2026

When the government announces new subsidies or cash assistance, Malaysians inevitably ask the same question: "Which group do I belong to?" The B40, M40, T20 — and now T15 — income classifications determine who receives financial aid, who pays full price for petrol, and how national resources are allocated. With the Department of Statistics Malaysia (DOSM) releasing its Household Income Survey for 2024, the income thresholds have been updated significantly. Here is everything you need to know for 2026.

What Are B40, M40, T20 and T15? The Official Definitions

Malaysia's household income classification system divides all households into three primary groups based on their position in the national income distribution:

• B40 (Bottom 40%) refers to the 40% of Malaysian households with the lowest incomes. This group is the primary target of government welfare and social protection programmes.
• M40 (Middle 40%) covers households in the middle of the income distribution — broadly what policymakers and economists call the middle class.
• T20 (Top 20%) represents the highest-earning 20% of households.
• T15 (Top 15%), introduced in Budget 2025, is a more refined subgroup within T20, targeting the wealthiest households for subsidy rationalisation.

According to DOSM, a "household" is defined as a group of individuals — related or otherwise — who live together and share common expenses for food, shelter and daily necessities. Household income includes all regular cash and in-kind receipts: salaries, business income, rental income, government transfers and other recurring sources.

This classification matters because it determines eligibility for programmes such as Sumbangan Tunai Rahmah (STR), PeKa B40, affordable housing schemes and fuel subsidies.

Updated Income Thresholds for 2026 (Based on DOSM Household Income Survey 2024)

The DOSM Household Income and Basic Amenities Survey 2024 found that the average (mean) household income in Malaysia rose to RM 9,155 per month, an increase of 3.8% from RM 8,479 in 2022. Based on this survey, the updated income thresholds are as follows:

In 2024, B40 households (approximately 3.28 million) accounted for only 16.7% of total household income in Malaysia, while M40 households (also 3.28 million) held 38.2%, and T20 households (1.64 million) controlled 45.1% — a slight improvement from 46.3% in 2022, according to DOSM data.

Detailed subdivision: B1 to T2

Each primary group is further divided into subcategories for more precise policy targeting:

This granularity is important in practice: a B1 household may qualify for a higher level of STR cash assistance than a B4 household, and a T1 household has considerably different financial circumstances from a T2 household.

How Do You Know Which Group You Belong To?

The classification is based on your total gross monthly household income — the combined earnings of all individuals living under one roof. To identify your group:

1. Add up the monthly income of all household members (salaries, business income, rental, allowances and any other regular income).
2. Compare the total against the national thresholds in the table above.
3. Note that the government also uses the PADU (Central Database Hub) to cross-reference income data and ensure accurate targeting of subsidies.

Keep in mind that classification is based on gross income, not what remains after taxes and living expenses. Economy Minister Rafizi Ramli has signalled a planned shift toward net disposable income as a measurement, which would better reflect financial realities — but as of 2026, the gross income threshold remains the official standard.

Income Distribution by State: Why Location Matters

One of the most important — and often overlooked — aspects of income classification is its geographic dimension. The same household income can place a family in completely different groups depending on the state in which they live.

For example, according to DOSM data, to qualify as T20 in Kuala Lumpur, a household needs to earn above RM 17,030 per month. In many other states, the T20 threshold is considerably lower. This reflects the significant differences in cost of living and wage levels across the country.

A household earning RM 8,000 per month would be classified as M40 in Kuala Lumpur or Selangor, but would likely fall into the T20 category in a lower-income state. The national thresholds do not capture this regional variation, which is one reason economists have argued for a more nuanced, locality-adjusted classification system.

Is the Income Gap Getting Wider? The Data on Inequality

Malaysia's income inequality, as measured by the Gini coefficient, has improved significantly over the past five decades. According to the Khazanah Research Institute (KRI), the Gini coefficient fell from 0.513 in 1970 to 0.399 in 2016, indicating a long-term narrowing of relative income gaps.

However, the picture is more complex when viewed in absolute terms. Even as the relative gap shrinks, the absolute difference in earnings between the lowest and highest income groups has grown — because higher earners see larger absolute increases even at lower growth rates. This is why many Malaysians feel that inequality has not improved, despite what official statistics show.

In 2022, DOSM reported that Malaysia's absolute poverty rate stood at 6.2%, down from 8.2% in 2021 — meaning approximately six in every 100 households still could not reliably meet basic needs for food and shelter. The Poverty Line Income (PLI) was revised upward to RM 2,589 per month in 2022.

T15 in 2026: Who Qualifies and What Changes for Them

The T15 income group — introduced in Budget 2025 — represents the top 15% of Malaysian households by income. It was created to enable more precise targeting of subsidy rationalisation, particularly for RON95 petrol, healthcare and education subsidies.

*Based on DOSM Household Income Survey 2024. The threshold varies by state — for example, the T15 threshold in Kuala Lumpur is approximately RM 19,005, while in Johor it is approximately RM 13,387.

Under Budget 2025, the government committed to retaining the RON95 petrol subsidy (priced at RM 2.05 per litre) for approximately 85% of the population, while removing it for T15 households. According to the Malaysian Institute of Economic Research, this affects approximately 4.3 million individuals.

Economists including Dr. Muhammed Abdul Khalid have raised concerns that the current T15 threshold fails to account for household size and local cost of living. A dual-income family in Kuala Lumpur earning RM 14,000 combined may be classified as T15 while facing living costs that leave them with very limited discretionary income. Economy Minister Rafizi Ramli has acknowledged this issue and stated that the government is reviewing the thresholds to incorporate locality and household size adjustments.

Government Financial Assistance for B40 Households in 2026

The Malaysian government provides multiple forms of direct financial and in-kind assistance to B40 households. Here is a summary of the key programmes active in 2026:

Sumbangan Tunai Rahmah (STR) 2026

STR is the primary cash transfer programme for low- and middle-income Malaysians. Under Budget 2026, the combined allocation for STR and the related Sumbangan Asas Rahmah (SARA) programme was increased to RM 15 billion, benefiting an estimated nine million recipients. Payments are distributed in four phases throughout the year.

STR 2026 payment amounts by household category:

Sumbangan Asas Rahmah (SARA) 2026

SARA provides cashless monthly credits loaded onto recipients' MyKad cards, usable for over 140,000 basic goods at more than 10,000 participating stores nationwide. It operates alongside STR and provides RM 50–RM 200 per month depending on household income and eKasih poverty status. A separate one-time RM 100 credit (SARA Untuk Semua) was disbursed to all Malaysian citizens aged 18 and above in February 2026.

Other key programmes for B40 households

• PeKa B40 — free health screenings, medical device assistance (up to RM 20,000), and cancer treatment completion incentives (RM 1,000) for STR recipients and their spouses aged 40 and above.
• MySalam — free takaful health coverage for B40 individuals aged 18–65, providing a one-time RM 8,000 payout on diagnosis of 45 covered critical illnesses and RM 50/day hospitalisation income replacement.
• Program Perumahan Rakyat (PPR) — government rental housing at RM 124/month in urban areas and affordable ownership options at RM 35,000–RM 42,000 per unit for households earning up to RM 3,000/month.
• Skim Jaminan Kredit Perumahan (SJKP) — government-backed mortgage guarantee for gig workers, farmers and self-employed individuals without a fixed income, with financing of up to RM 500,000.

What's Changing: The Shift Away from B40/M40/T20 Classification

The B40/M40/T20 framework, originally based on World Bank demarcation guidelines adopted by Malaysia in 2006, has long been criticised for oversimplifying the financial reality of Malaysian households. Economy Minister Rafizi Ramli announced in 2024 that the government is working to move away from fixed income brackets toward a net disposable income approach — measuring what households actually have left after taxes, deductions and essential living expenses.

The Khazanah Research Institute has proposed an alternative classification that better reflects actual consumption patterns:

• B20 (Bottom 20%): Households focused on meeting basic needs — food, housing and clothing.
• M50 (Middle 50%): Economically constrained households navigating trade-offs between essential and aspirational spending.
• T30 (Top 30%): Households that can consistently afford aspirational spending — the group KRI argues is the true middle class by international standards.

KRI's research suggests that many households currently classified as M40 are closer in financial behaviour to poor households, as they still must choose between essential and non-essential spending. Only T30 households — not M40 — demonstrate spending patterns consistent with genuine middle-class status globally.

The shift toward PADU-based, contextually sensitive income assessment is ongoing. Until a formal reclassification is announced, the B40/M40/T20 framework with 2024 DOSM thresholds remains the operational standard for all government assistance programmes.