Income Tax Slabs Budget 2025-2026

In Pakistan, income tax is levied on individuals and businesses based on their taxable income. Taxable income is the total income earned during a tax year, minus any deductions and exemptions that are allowed under the tax laws. Income tax rates in Pakistan are progressive, meaning that higher levels of income are taxed at higher rates.

The recent modifications to income tax brackets for employed individuals as outlined in the federal budget for the fiscal year 2025-26 proposed some changes in tax slabs. Commencing from July 1, 2025.

The federal government has announced a major income tax reduction for the salaried class, starting from July 2025, which will apply to the fiscal year 2025-26.

This new tax policy is a big relief for people earning regular monthly salaries. It covers a wide range of income levels—from those making Rs50,000 per month to Rs3 million per month.

The new structure means lower tax deductions, giving people more money in hand every month. It is being welcomed across Pakistan, especially during times of high inflation and rising living costs.

Lower Income Groups to Save More

People earning Rs100,000 per month will now pay Rs6,000 in tax annually, instead of Rs30,000. This means they save Rs2,000 per month.

Similarly, those making Rs150,000 per month will see their monthly tax fall from Rs10,000 to Rs6,000.

Middle-Class Relief

Employees with a monthly salary of Rs300,000 will now pay Rs38,833 in monthly tax, compared to Rs45,833 previously.

For Rs600,000 per month, tax goes down from Rs113,750 to Rs106,750, a monthly saving of Rs7,000.

High Earners Also Benefit

Even top earners will see tax cuts. A person earning Rs1 million a month will pay Rs7,000 less each month.

Someone earning Rs3 million per month will save Rs16,888 monthly, compared to last year.

Why the Government Did This

According to officials, this step is aimed to increase disposable income. When people have more money, they can spend more. This boosts the economy and supports businesses.

The government believes this will also help the middle class, which has been struggling with high prices and low salary growth.

Tax Table Summary: 2025 vs 2026

This change will officially start on July 1, 2025, when the new fiscal year begins. People from all salary brackets will benefit, and the financial burden on the salaried class will be much lower.