Big Relief Likely for Salaried Class in Pakistan’s Budget 2025-26

ISLAMABAD – The federal government is planning to offer major tax relief to Pakistan’s salaried class in the upcoming Budget 2025-26. This comes as a welcome move during a time of high inflation and growing economic pressure on households.

According to sources, final talks are ongoing between the government and the International Monetary Fund (IMF). These talks are focusing heavily on tax reforms.

Prime Minister Shehbaz Sharif has asked officials to provide relief for those who earn fixed monthly wages. Reports say the government collected higher taxes than expected from salaried individuals this year. That success may now lead to a reduction in their tax burden.

Expected Tax Relief for Salaried Workers

Here are the changes being considered in the new budget:

• Annual income up to Rs1 million (about Rs83,000 per month) may become tax-free. The current limit is Rs600,000 per year.

• Those earning Rs100,000 per month might pay only 2.5% tax, down from 5%.

• People earning Rs183,000 monthly could see their tax rate fixed at 12.5%.

• Salaries around Rs267,000 per month may be taxed at 22.5%, down from the current 25%.

These changes, if approved, will directly increase the monthly take-home pay for thousands of middle-class workers in Pakistan.

Possible Tax Cuts for Businesses Too

The budget may also bring some benefits for the corporate sector. A cut in the corporate income tax rate is under discussion, along with a 0.5% reduction in the super tax.

A Break for the Middle Class

These proposals aim to support middle-income earners, especially professionals, teachers, government employees, and private sector staff. They have long complained about rising costs and shrinking disposable incomes.

The tax relief is seen not only as a financial benefit but also as recognition of the salaried class’s steady contribution to the national tax base.

Final Decision in June

The final shape of the reforms depends on IMF discussions. But if passed, these changes could help build a fairer tax system — one that doesn’t heavily burden those who earn through honest, fixed incomes.

The official federal budget is expected in June 2025. All eyes are now on the government to see if this relief package will be part of the final budget speech.