Budget 2025-26: New Expected Tax Slabs- Check Here

Pakistanis, especially those earning a salary, may soon get some relief as the government plans to reduce income tax rates by 2.5% in the upcoming 2025–26 budget. This change is being considered because salaried workers have been heavily affected by high taxes. The tax cut is part of a larger set of reforms being prepared before the new budget is announced. The goal is to ease the financial pressure on salaried individuals who regularly contribute to the country’s tax income. According to sources, the government plans to lower the tax rate by 2.5% in each of the higher income brackets while keeping the current income levels for each bracket the same. For example, the highest tax rate would come down from 35% to 32.5%, and similar reductions would apply to other brackets as well. Expected Tax Slabs after Budget 2025 Proposed Income Tax Brackets (Post 2.5% Rate Reduction)

Annual Income (PKR)	Current Tax	Proposed Tax
Up to 600,000	No tax	No tax
600,001 – 1,200,000	5% of the amount exceeding Rs600,000	2.5% of the amount exceeding Rs600,000
1,200,001 – 2,200,000	Rs30,000 + 15% of the amount exceeding Rs1,200,000	Rs30,000 + 12.5% of the amount exceeding Rs1,200,000
2,200,001 – 3,200,000	Rs180,000 + 25% of the amount exceeding Rs2,200,000	Rs180,000 + 22.5% of the amount exceeding Rs2,200,000
3,200,001 – 4,100,000	Rs430,000 + 30% of the amount exceeding Rs3,200,000	Rs430,000 + 27.5% of the amount exceeding Rs3,200,000
Above 4,100,000	Rs700,000 + 35% of the amount exceeding Rs4,100,000	Rs700,000 + 32.5% of the amount exceeding Rs4,100,000

The relief is being considered as salaried individuals are bearing brunt amid soaring taxes. Furthermore, Pakistani government is also considering surge in the income tax exemption threshold, potentially increasing it from Rs6lac to Rs1 million. This would exempt more low-income earners from tax entirely. Officials emphasized that despite these relief efforts, the government aims to keep the overall revenue impact neutral by balancing tax cuts with other proposed revenue measures and reductions in corporate and withholding tax rates.