KARACHI: Pakistan's salaried class may receive significant income tax relief in the federal budget for the fiscal year 2025–26. This potential relief comes amid final negotiations between the government and the International Monetary Fund (IMF), currently underway.
Prime Minister Shehbaz Sharif has reportedly directed officials to introduce tax relief measures for salaried employees after being informed that tax collection from this segment exceeded expectations in the current fiscal year.
According to insider sources, the government is considering a uniform 2.5% reduction in income tax rates across all income slabs for salaried workers. Corporate entities might also benefit from similar tax reductions. Additionally, the Prime Minister has proposed a 0.5% cut in the super tax rate.
One key proposal under review is increasing the annual tax exemption threshold from Rs600,000 to Rs1 million—approximately Rs83,000 per month—providing significant relief to low-income earners.
Under the new proposals, individuals earning Rs100,000 monthly could see their income tax rate slashed from 5% to 2.5%. Those with a monthly income of Rs183,000 may be taxed at a revised rate of 12.5%. For higher earners, such as those making Rs267,000 a month, the tax rate may be reduced from 25% to 22.5%.
These recommendations are expected to be presented to the IMF during ongoing budget discussions. If approved, they could provide much-needed financial relief to Pakistan’s middle class and improve economic stability by stimulating consumer spending.
