KARACHI – Sigh of relief for Pakistanis as a 2.5 percent reduction in income tax rates is on the cards in the upcoming Budget 2025–26, as the salaried class is bearing the brunt of massive taxes.
This proposed cut comes as part of broader tax reforms being finalized ahead of budget presentation. The move aims to ease financial burden on Pakistan’s salaried class, which consistently contributed share to the national tax revenue.
Sources familiar with development revealed the government is working to revise income tax slabs by cutting tax rate by 2.5 percent across each higher bracket, without changing existing fixed tax thresholds. The highest slab, would drop to 32.5%, while other slabs would see similar proportional reductions.
Expected Tax Slabs after Budget 2025
Proposed Income Tax Brackets (Post 2.5% Rate Reduction)
| Annual Income (PKR) | Current Tax | Proposed Tax |
|---|---|---|
| Up to 600,000 | No tax | No tax |
| 600,001 – 1,200,000 | 5% of the amount exceeding Rs600,000 | 2.5% of the amount exceeding Rs600,000 |
| 1,200,001 – 2,200,000 | Rs30,000 + 15% of the amount exceeding Rs1,200,000 | Rs30,000 + 12.5% of the amount exceeding Rs1,200,000 |
| 2,200,001 – 3,200,000 | Rs180,000 + 25% of the amount exceeding Rs2,200,000 | Rs180,000 + 22.5% of the amount exceeding Rs2,200,000 |
| 3,200,001 – 4,100,000 | Rs430,000 + 30% of the amount exceeding Rs3,200,000 | Rs430,000 + 27.5% of the amount exceeding Rs3,200,000 |
| Above 4,100,000 | Rs700,000 + 35% of the amount exceeding Rs4,100,000 | Rs700,000 + 32.5% of the amount exceeding Rs4,100,000 |
The relief is being considered as salaried individuals are bearing brunt amid soaring taxes.
Furthermore, Pakistani government is also considering surge in the income tax exemption threshold, potentially increasing it from Rs6lac to Rs1 million. This would exempt more low-income earners from tax entirely.
Officials emphasized that despite these relief efforts, the government aims to keep the overall revenue impact neutral by balancing tax cuts with other proposed revenue measures and reductions in corporate and withholding tax rates.
Budget 2025-26: Tax relief for those earning up to Rs 1 Lac per month on cards
