Expected salaries raise for employees in Budget 2025-26

The federal government is preparing to announce the new budget for 2025–26 in early June. People are hopeful for a good increase in government salaries and pensions.

What Happened in Last Year’s Budget?

In the 2024–25 budget, the government:

• Increased salaries by 25% for Grades 1 to 16
• Increased salaries by 20% for Grades 17 to 22
• Raised pensions by 15% for retired employees

What to Expect in Budget 2025–26?

Reports say the government may repeat the same salary hike:

• 25% raise for Grade 1–16 employees
• 20% raise for Grade 17–22 employees

But keep in mind, nothing is officially confirmed yet. The final decision will be announced on budget day.

Good News on Income Tax

The government is also planning a 2.5% cut in income tax rates for salaried individuals. This would help reduce the financial pressure on people already dealing with high taxes.

Proposed New Tax Rates

Here’s a comparison of current vs expected income tax after the 2.5% cut:

Possible Tax-Free Income Increase

The government is also thinking about raising the tax-free income limit from Rs 600,000 to Rs 1 million, which means low-income earners may not have to pay tax at all.

Balance in Budget

While offering relief, the government plans to balance the cuts by adjusting other taxes, like corporate and withholding taxes, to maintain overall revenue.

Read More: Cement prices in Pakistan – check new rates (May 2025)