B40, M40, T20 and the Poverty Line: How Malaysia Measures Income Inequality

You may once have been labelled “B40” or “T20” on a subsidy form — but that label is not your salary. It is your position in a line arranged by the Department of Statistics Malaysia (DOSM), and that line is redrawn every time new data comes in. Understanding how the line is drawn changes how you read almost every debate about the cost of living in Malaysia.

What do B40, M40 and T20 actually mean?

All three terms refer to relative position, not a fixed amount of money:

• B40 — the bottom 40% of households by income.
• M40 — the middle 40% in the middle of the distribution.
• T20 — the top 20% with the highest incomes.

Because they are based on percentiles, the thresholds shift each time DOSM runs a survey. Someone can receive a pay rise and still remain in the same group, if everyone else’s income also increases. This is the main reason these labels are so often mistaken for a fixed “salary class”.

The figures that set the group boundaries come from a single source: the Household Income Survey (HIS).

How does DOSM collect household income data?

DOSM conducts the Household Income and Basic Amenities Survey (HIS/BA), usually paired with the Household Expenditure Survey (HES), at least twice within a five-year period. Enumerators visit a sample of selected households across every state and record monthly gross income — covering salaries, self-employment income, property income, as well as gifts and transfers.

A few important points about the method:

• The unit of measurement is the household, not the individual. One household may have several working members, so household income is usually higher than a single person’s salary.
• Since 1989, the official figures refer to Malaysian citizens only, although non-citizens are also sampled.
• The 1970 and 1974 data cover Peninsular Malaysia only; Sabah and Sarawak were first included in 1976.

(The coverage and citizenship notes above are based on the OpenDOSM Household Income data catalogue.)

It is from this income distribution that DOSM calculates the two most frequently cited summary values: the median (the value in the middle of the line) and the mean (the arithmetic average). The median is more representative of the “typical household” because it is not pulled up by a handful of very wealthy households.

Indicator (Malaysia)	2022	2024
Monthly median income	RM6,338	RM7,017
Monthly mean income	RM8,479	RM9,155
Annual median growth	2.5%	5.1%
Urban median	RM7,243	RM8,139
Rural median	RM4,094	RM4,588

Source: DOSM, Household Income Survey Report 2022 and 2024.

The gap between the mean (RM8,479) and the median (RM6,338) in 2022 is itself a signal of inequality: when the average is far higher than the middle value, it means income is concentrated at the top of the distribution.

What are the B40, M40 and T20 thresholds?

Once the distribution is ranked, DOSM cuts it at the 40th and 80th percentiles to obtain the group thresholds. Here is the 2022 picture:

Group	Monthly household income range (2022)	Number of households
B40	Below RM5,249	~3.16 million
M40	RM5,250 – RM11,819	—
T20	RM11,820 and above	~1.58 million

Source: DOSM (cited by RinggitPlus), Household Income Survey 2022.

Note that the names “B40” (40%) and “T20” (20%) refer to the number of households, not the share of income. When we look at how much of the country’s total income each group holds, the inequality becomes clearer:

• T20 — only 20% of households, but holding 46.3% of total income (2022).
• M40 — 37.6%.
• B40 — 40% of households, but only 16.1% of total income.

In other words, the top one-fifth of households earn almost half of all income, while the bottom 40% share less than one-sixth.

What is the Poverty Line Income, and how is it different?

B40 tells you who is at the bottom — but it does not tell you who is poor. Someone can be within the B40 without being counted as poor. Poverty is measured separately using the Poverty Line Income (PLI).

The PLI is the minimum income a household needs to meet its basic needs, and it consists of two components:

1. Food component — based on optimal and healthy nutritional requirements (meals by food category converted into prices), no longer merely the minimum calorie requirement of the old method.
2. Non-food component — 146 items (clothing, housing, transport, education, health and others) based on the actual spending patterns of B20 households.

In 2019, DOSM revised this methodology and raised the national PLI sharply from RM980 to RM2,208 a month (RM1,169 food + RM1,038 non-food). The immediate effect: the number of poor households recorded jumped to 405,441, and the absolute poverty rate was recalculated to 5.6% (2019). By 2022, the PLI rose again to RM2,589 (RM1,198 food component), reflecting the rising cost of living.

The 2019 revision matters: the old RM980 line had long been considered too low relative to the current cost of living, so much so that almost no household was counted as poor below it. Raising the line does not necessarily mean poverty increased in reality — it more reflects the use of a threshold that is closer to the real cost of basic needs.

Is Malaysia’s income gap widening?

To summarise the entire distribution in a single number, DOSM uses the Gini coefficient. Its scale is simple:

• 0 = perfect equality (every household earns the same).
• 1 = complete inequality (one household holds all the income).

The higher the value, the wider the gap. Based on gross income, Malaysia’s Gini coefficient:

Year	Gini coefficient (gross income)
2016	0.399
2019	0.407
2022	0.404

Source: DOSM / OpenDOSM, household inequality series.

The movement is small — down 0.003 points from 2019 to 2022 — so it is more accurate to say Malaysia’s income gap is stable at a high level rather than clearly widening or narrowing. The urban Gini (0.393 in 2022) is also higher than the rural one (0.351), because cities encompass both the poorest and the richest households within the same space.

Why can your “group” change without your salary changing?

Because the B40/M40/T20 thresholds are recalculated with every survey, someone can “move up” or “move down” a group without any change in their actual salary — simply because other people’s incomes changed. That is why these labels are ill-suited as a precise measure for targeting aid to specific households: they tell you a person’s relative position, not whether that household truly needs help.

To read these statistics correctly, remember three things: (1) B40/M40/T20 are relative positions, not salaries; (2) poverty is measured separately through the PLI; and (3) the Gini summarises the overall gap, not the fortunes of any particular household.

Next steps

• Check your own position by comparing your household income (not an individual salary) against the 2022 thresholds in the table above.
• For the latest figures by state and district, refer directly to the OpenDOSM portal (open.dosm.gov.my), which provides raw data in CSV and Parquet formats.
• When you read news claiming “poverty is rising” or “the gap is widening”, check whether the change comes from economic reality or from a methodology revision — such as the 2019 PLI increase — because both look the same in a headline but mean very different things.