Budget 2026: Malaysia Raises Tobacco, Alcohol Excise Duties to Fund Health Programmes

The government will raise excise duties on tobacco products and alcoholic beverages under Budget 2026, with the extra revenue earmarked for health spending, Prime Minister and Finance Minister Anwar Ibrahim announced in Parliament on Friday.

The tobacco duty increases take effect on Nov. 1, 2025 and are as follows:

Cigarettes: +2 sen per stick.
Cigars, cheroots and cigarillos: +RM40 per kg.
Heated tobacco products: +RM20 per kg of tobacco content.

Alcoholic beverages will face a 10% increase in excise duty, also effective Nov. 1, 2025. The government says the measure aims to reduce access to alcohol and promote healthier lifestyles.

Proceeds from the higher duties on cigarettes and alcohol will be channelled to the Ministry of Health. Anwar said the funds will support programmes including the Healthy Lung Initiative and treatment for diabetes and heart disease.

Separately, the government extended import duty and sales tax exemptions for nicotine replacement therapies and expanded the exemptions to include nicotine mist and nicotine lozenges. Those exemptions will remain in place until Dec. 31, 2027.

Budget 2026 also proposes broadening the individual income tax exemption for vaccination expenses to cover all vaccines registered and approved by the Ministry of Health.

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