ISLAMABAD: The salaried individuals in Pakistan have taken a sigh of relief as the federal government unveiled Budget 2025-26, with significant reductions in income tax rates and slabs.
The new measures aim to ease the tax burden on middle and lower-income earners, in boost to economic growth and an increase in income. Under the proposed reforms, individuals earning up to 6Lac annually will see their tax rate slashed from 5% to just 1%.
The ones with an income of 600,001 to 1,200,000 will enjoy the same decrease, reducing their tax burden. More affluent income groups will also enjoy beneficial revisions, with 23% from 25% as the tax liability for people with 2.2 million to 3.2 million PKR income. These are intended to foster equity and encourage greater conformity among high-income earners.
Finance Minister Muhammad Aurangzeb said, “We want to make the tax system fairer and more favorable to the hardworking people of Pakistan. These cuts will increase consumer spending and spur economic activity across the board.”
These tax reforms will enhance disposable incomes for millions of Pakistanis, which can translate into increased consumption and investment.
Income Tax Calculations 2025
Income Tax Slabs for Salaried Individuals
| 50,000 | 600,000 | – | – | – |
| 100,000 | 1,200,000 | 30,000 | 6,000 | -24,000 |
| 200,000 | 2,400,000 | 230,000 | 162,000 | -68,000 |
| 300,000 | 3,600,000 | 550,000 | 466,000 | -84,000 |
| 400,000 | 4,800,000 | 945,000 | 861,000 | -84,000 |
| 500,000 | 6,000,000 | 1,365,000 | 1,281,000 | -84,000 |
| 600,000 | 7,200,000 | 1,785,000 | 1,701,000 | -84,000 |
| 700,000 | 8,400,000 | 2,205,000 | 2,121,000 | -84,000 |
| 800,000 | 9,600,000 | 2,625,000 | 2,541,000 | -84,000 |
| 900,000 | 10,800,000 | 3,349,500 | 3,257,100 | -92,400 |
| 1,000,000 | 12,000,000 | 3,811,500 | 3,719,100 | -92,400 |
