The Pakistani government is set to introduce significant tax relief for Salaried Class individuals in the upcoming 2025-26 budget, following approval from the International Monetary Fund (IMF). The revised income tax structure proposes reduced rates across all salary brackets, with those earning up to Rs. 100,000 monthly facing just 2.5% tax. This move comes as part of ongoing negotiations between Pakistan and the IMF to balance fiscal sustainability with economic relief measures.
Federal Budget Presentation Likely to be Postponed Again
Under the new proposal, progressive tax rates will apply with 12.5% for incomes between Rs. 100,001-183,000, 22.5% for Rs. 183,001-267,000, and 27.5% for Rs. 267,001-333,000. The highest bracket of 32.5% will only affect those earning above Rs. 333,000 monthly. These changes aim to provide substantial relief to Pakistan’s middle class while maintaining government revenue streams through an expanded tax base.
The tax reforms are expected to benefit over 4 million salaried professionals and stimulate domestic consumption. Finance Ministry officials indicate this restructuring represents a careful compromise between IMF requirements and public welfare considerations. The final budget approval is anticipated in coming days, with implementation planned for July 1, 2025, marking Pakistan’s first major income tax overhaul in three years.
