Pakistan Budget 2025-26: Approved Tax Relief for Salaried Class
The National Assembly of Pakistan has officially passed the Federal Budget 2025-26, bringing significant tax relief for the salaried class. The revised income tax slabs, now approved by Parliament, will result in lower deductions from monthly salaries starting from July 1, 2025.
This development marks one of the most substantial tax adjustments for salaried individuals in recent years.
New Income Tax Slabs for Salaried Class (Approved)
| Annual Taxable Salary (PKR) | Fixed Amount (PKR) | Tax Rate on Exceeding Income |
|---|---|---|
| Up to 600,000 | 0 | 0% |
| 600,001 – 1,200,000 | 0 | 1% of amount exceeding 600,000 |
| 1,200,001 – 2,200,000 | 6,000 | 11% of amount exceeding 1,200,000 |
| 2,200,001 – 3,200,000 | 116,000 | 23% of amount exceeding 2,200,000 |
| 3,200,001 – 4,100,000 | 346,000 | 30% of amount exceeding 3,200,000 |
| Above 4,100,000 | 616,000 | 35% of amount exceeding 4,100,000 |
Key Highlights for Salaried Individuals
- Tax Reduction Across All Brackets: The most significant relief is for individuals earning between PKR 600,001 and PKR 2,200,000 per year.
- Lower Fixed Amounts: Fixed amounts in each slab have been reduced compared to previous years, further easing the tax burden.
- Salaries up to PKR 600,000 remain fully exempt.
Example of New Tax Calculation
For an individual earning PKR 2.4 million annually (approximately PKR 200,000 per month):
- Fixed Tax: PKR 116,000
- Variable: 23% of (2,400,000 – 2,200,000) = PKR 46,000
- Total Annual Tax: PKR 162,000 (~PKR 13,500 per month)
Under the previous tax regime, the tax on the same income would have been approximately PKR 230,000 per year.
This adjustment results in a saving of around PKR 68,000 per year.
Why This Matters
The approved tax cuts will directly increase take-home pay for millions of salaried Pakistanis starting from July 2025. This change provides meaningful relief, especially to middle-income earners, at a time when household budgets are under pressure from rising inflation.
The Finance Ministry stated that these adjustments are aimed at boosting disposable income and encouraging economic activity while simplifying the tax structure for individual taxpayers.
Effective Date
These new slabs and rates will be applicable from July 1, 2025, for the financial year 2025-26.