KARACHI – Pakistnai government introduced revised income tax slabs for salaried individuals in the 2025–26 federal budget. The changes, effective from July 2025, are designed to redistribute the tax burden more equitably, particularly by imposing higher rates on upper-income earners.

According to details published in the Pakistan Observer, the revised structure introduces significant adjustments across various salary bands. The updated tax slabs are as follows:

New Tax Rate Budget 2025-26

Income Bracket (Annual Salary)	Current Tax Rate	Proposed Tax Rate
Up to 600,000	N/A	1%
600,001 – 1,200,000	5%	1%
Up to 1,200,000	Less than 30,000	6,000 (approx.)
Up to 2,200,000	15%	11%
2,200,001 – 3,200,000	25%	23%

Budget 2025-26 introduces major relief for salaried class by adjusting the income tax slabs. For individuals earning up to 600,000 annually, the tax rate is proposed to be reduced from 5% to just 1%, providing substantial relief to lower-income earners.

Those earning between 600,001 and 1,200,000 will also see their tax rate decreased from 5% to 1%, further easing the tax burden for middle-income individuals. Additionally, the minimum tax payable for those earning up to 1.2 million is proposed to be lowered from less than 30,000 PKR to approximately 6,000.

For higher earners earning between 2.2 million and 3.2 million annually, the tax rate is set to be reduced from 25% to 23%, making the tax system more equitable for those with higher incomes. Overall, these measures are aimed at reducing the financial burden on the salaried workforce and promoting economic growth through tax relief.

Officials from the Ministry of Finance said that the revised structure is intended to “enhance fairness in the tax system while addressing the pressing need for domestic revenue generation.” The reforms come as Pakistan negotiates fiscal stabilization measures with international lending institutions, including the International Monetary Fund (IMF).

Analysts believe the move could help broaden the tax base, though it may also raise concerns among corporate professionals and high-salaried individuals who now face a significantly higher tax liability.

The changes reflect the government’s ongoing efforts to reform the taxation system while navigating a complex economic landscape marked by inflationary pressures, a depreciating rupee, and mounting debt obligations.