EPF is taxed, unless you pay less than RM6,000 of EPF AND INSURANCE every year. which is unlikely for most people in Malaysia

that means, the 3% extra you get from EPF, will give you a tax saving on the EPF portion, however will be taxed back at your salary portion

total tax is the same.

example, me and my employer combined contribute 23% to EPF of basic salary. i get to keep 89% of my basic salary after excluding EPF

however, normally, this 23% of EPF will be fully taxed (except the first RM6k), and my 89% will be fully taxed (based on the schedule).

so when i get 3% saving, i will get 20%, which will be fully taxed (except the first RM6k), and i instead get 92% of basic salary, fully taxed.

total tax is on 89%+23% which is equal to tax on 92%+20% of salary. both subject to first RM6k being tax exempt on EPF/insurance

This post has been edited by Nachiino Etamay: Jan 29 2016, 12:47 PM

thats cuz you bloody dont pay tax.

for CY2015, my salary grew by 9%, and my after tax salary grew by 10%

This is due to the 1%-2% lower tax rates for all brackets, and higher brackets.
the only reason you dont "feel" income tax reduction, as you are climbing the brackets

ie: you earn more money, hence moving from 13% to 16% to 20% to 24% bracket. then your after tax salary will grow slower compared to your salary.

its not 5k.

the threshold is RM6k EPF contribution

EPF contribution is at least 11%+11%-12% which is 23% of base salary.

to achieve RM6k per annum of EPF contribution, your base salary will be RM6k/0.23%=RM26,000 per annum.

most people, with one or two month bonus, will get RM26,000 per annum. even graduates.