Pakistan’s federal budget for 2025–26 brings welcome news for salaried individuals. The government has introduced revised tax slabs designed to ease the burden on lower and middle-income earners. This change aims to balance the strain of rising costs and inflation.
Under the new structure, individuals earning between ₹600,000 and ₹1.2 million annually will now pay just 1% income tax, a significant reduction from the previous 5%. Those in the ₹1.2 million to ₹2.2 million range will see their tax rate drop from 15% to 11%, while people earning between ₹2.2 million and ₹3.2 million will now be taxed at 23% instead of the earlier 25%. Additionally, the surcharge on income above ₹10 million has been reduced by 1 percentage point, offering modest relief to high earners.
The budget keeps the no-tax threshold the same, but these cuts are expected to make a noticeable difference in take-home pay. Salaried individuals will benefit from lower deductions, which should help with household budgets and reduce inflationary pressure. The emphasis is on encouraging professionals and skilled workers to remain in the country by lightening their tax load.
Moving forward, the government also plans to support this group with incentives for energy-saving measures and access to pension and savings schemes. Overall, these reforms aim to simplify the tax system and foster fairness, while helping the salaried class manage the rising cost of living.