Sigh of relief for salaried individuals in Pakistan as federal government unveiled Budget 2025-26, with significant reductions in income tax rates and slabs.
The new measures are aimed at reducing the tax burden on middle- and lower-income earners to help boost economic growth and raise incomes. Under the proposed reforms, people earning up to 600,000 rupees a year will see their tax rate drop from 5% to just 1%. Those earning between 600,001 and 1,200,000 rupees will also get the same benefit, with a lower tax rate that will reduce how much they have to pay.
Income Tax Slabs 2025
For taxpayers earning up to 1.2 million, the minimum tax payable is set to decrease from less than 30,000 to approximately 6,000, providing immediate relief.
Tax Slabs in Pakistan
| Income Bracket (Annual Salary) | Proposed Tax Rate |
| Up to 600,000 | 1% |
| 600,001 – 1,200,000 | 1% |
| Up to 1,200,000 | 6,000 (approx.) |
| Up to 2,200,000 | 11% |
| 2,200,001 – 3,200,000 | 23% |
Finance Minister said that the government wants a fair tax system that supports hardworking citizens. He added that the tax cuts will help boost consumer spending and drive economic activity in different sectors.
With these tax reforms, millions of Pakistanis will have more disposable income, which could lead to increased spending and more investment in the economy.
