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Budget 2027: AI subscriptions like ChatGPT become tax deductible
Digital Business

Budget 2027: AI subscriptions like ChatGPT become tax deductible

Budget 2027 expands lifestyle tax relief to AI subscriptions, adds 100,000 free AI subscriptions and allocates RM30 million for SMEs.

Ammar Rahimi · 6 November 2026 · 3 min read

Budget 2027, tabled on 9 October, brings good news for anyone paying a monthly AI subscription. The government proposes expanding the individual lifestyle tax relief to cover software and AI application subscriptions. At the same time, the free AI subscription programme for young Malaysians grows by another 100,000 places, this time with ChatGPT included.

1. Claim your AI subscription on your taxes

From the 2027 year of assessment, the individual lifestyle tax relief will cover software and AI application subscriptions for personal use, as well as those bought for a spouse or child. In practice, qualifying fees for ChatGPT, Gemini or other eligible AI apps can go into your income tax filing.

One detail matters: this is not a separate relief. AI subscriptions share the existing RM2,500 cap for the overall lifestyle relief, which already covers reading materials, computers, smartphones and internet subscriptions.

The government says the measure aims to encourage digital literacy and wider use of AI to lift productivity. Qualifying spending is what you pay during 2027, and you claim it when filing your tax return in 2028.

2. Another 100,000 free AI subscriptions

The existing AI Untuk Rakyat programme offers 100,000 Malaysians aged 18 to 30 three months of free access to selected AI apps once they pass six learning modules on the Rakyat Digital portal. Current providers are YTL AI Labs, Alibaba and Google.

Budget 2027 adds another 100,000 places and expands the app list to include ChatGPT. Prime Minister Datuk Seri Anwar Ibrahim said the expansion followed a strong response to the first round.

3. RM30 million for small businesses

The government has allocated RM30 million through MDEC to help 4,000 micro, small and medium enterprises adopt AI and automate their operations. The programme will also train and certify 5,000 AI professionals.

One caveat: the RM30 million is not a fixed grant for every business. The amount each applicant can claim, qualifying expenses and application requirements all depend on the programme's implementation details. Interested businesses should watch for announcements from MDEC.

4. Skills and research funding

AI Malaysia Berhad, the country's lead AI agency under the Digital Ministry, receives almost RM15 million to strengthen a safe and ethical AI ecosystem. Its target is 200,000 AI-skilled workers.

Separately, RM6 billion is allocated across ministries for research, development and commercialisation of innovations. That is a broad allocation, not one reserved for AI alone.

The government is also planning a sovereign AI cloud to keep citizens' data and the country's strategic information under Malaysian control.

What it means for you

If you already pay for an AI subscription, keep the receipts from January 2027 onward. If you do not, the second round of free subscriptions for ages 18 to 30 is the cheapest way to try one.

  1. Keep your receipts. Qualifying AI app fees count toward the RM2,500 lifestyle relief from the 2027 year of assessment.
  2. Plan the shared cap. The RM2,500 cap covers reading materials, phones, internet and now AI. Decide what gives you the most value.
  3. Sign up for AI Untuk Rakyat. If you are 18 to 30, watch the Rakyat Digital portal for the 100,000 new places, now including ChatGPT.
  4. SME owners: wait for MDEC. Full details of the RM30 million for 4,000 SMEs will come from MDEC, not other channels.
  5. Build AI skills. The 200,000 skilled-worker target means more training and certifications are coming. Start with the free courses offered under the Rakyat Digital initiative.

Sources