The Pakistan Federal Budget 2025-26 has been announced, and there is some relief for the salaried class. The government has decreased income tax on different slabs by up to 80%, providing great benefits to the low and medium-income people. Many expected that the minimum exempted slab would be increased, but it’s still kept at Rs. 600,000 annual income. If you are curious about new tax rates and how much tax you will have to pay on your salary, I will show you all the details in this blog.
Let’s start with the new income tax slab rates.
Decreased Income Tax Rates for 2025-26
Under the new taxation policy in the budget, individuals with an annual income below Rs. 600,000 (up to Rs. 50,000 per month) have been exempted.
The next slab for people with annual income between Rs. 6 lacs and Rs. 12 lacs (from Rs. 50,001 to Rs. 100,000 per month) has seen a major drop in the tax rate (from 5% to 1% now).
Moving on to the third slab for people earning between Rs. 12 lacs and Rs. 22 lacs annually (from Rs. 100.001 to Rs. 183,333 per month), the tax rate has been decreased from 15% to 11%.
The tax rate for the fourth slab, containing people earning between Rs. 22 and Rs. 32 lacs annually (Rs. 183,334 to Rs. 266,667 per month), has came down from 25% to 23%.
The tax rate for the next slab for people with annual income between Rs. 32 lacs and Rs. 41 lacs (from Rs. 266,668 to Rs. 341,667 monthly) is the same 30%.
For the people earning between Rs. 41 lacs and 1 crore (from Rs. 341,668 to Rs. 833,333 per month) is also kept the same 35%.
For people earning over 1 crore annually (over Rs. 833,333 per month), the tax has been reduced from 36% to 35%.
Old vs. New Income Tax Rates for Different Slabs
Check out the comparison of previous and new tax rates as per different income slabs, so you can calculate your income tax for the existing fiscal year as well as the upcoming fiscal year:
| Annual Income | Tax Rate Old (2024-25) | Tax Rate New (2025-26) |
| 0 to 6 Lacs | 0% | 0% |
| Up to 12 Lacs | 5% of the amount exceeding Rs. 600,000 | 1% of the amount exceeding Rs. 600,000 |
| 12 Lacs to 22 Lacs | Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000 | Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000 |
| 22 Lacs to 32 Lacs | Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000 | Rs. 116,000 + 23% of the amount exceeding Rs. 2,200,000 |
| 32 Lacs to 41 Lacs | Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000 | Rs. 346,000 + 30% of the amount exceeding Rs. 3,200,000 |
| 41 Lacs to 1 Crore | Rs. 700,000 + 35% of the amount exceeding Rs. 4,100,000 | Rs. 616,000 + 35% of the amount exceeding Rs. 4,100,000 |
| Over 1 Crore | Rs. 2,765,000 + 36% of the amount exceeding Rs. 1 Crore | Rs. 2,681,000 + 35% of the amount exceeding Rs. 1 Crore |
This relief was expected as the recent figures show that the salaried individuals will end up paying 5 times higher tax compared to retailers and exporters (as per different media outlets). The salaried class paid around Rs. 430 billion in income tax in the first 10 months of FY 2024-25. This class paid Rs. 368 billion in taxes in fiscal year 2023-24. It means that this class has paid more taxes this year, mainly due to an increase in the income taxes last year. Now, this budget aims to provide relief to persons with low to medium income jobs.
Monthly Income Tax on Salaries
If you want to know how much tax will be deducted if this after the implementation of proposal, here are the expected monthly income taxes on different salaries:
As you can see, people with salaries up to Rs. 100,000 per month will receive a massive 80% relief in the income tax. The rate then gradually decreases for people with higher salaries.
The monthly impact might seem mild, but the annual impact is decent enough for most people. For example, if a person has a monthly salary of Rs. 100,000, the monthly income tax was Rs. 2,500 before and is Rs. 500 now. Similarly, the annual income tax for such a person was Rs. 30,000, which has been came down to Rs. 6,000 only.
We are talking about Rs. 24,000 annual savings, and an average person can buy a mobile, furniture, an air cooler, a used laptop, kitchen appliances, televisions, and much more with this amount. So, it’s definitely a great relief.
What do you think about the relief in the income tax? Is it okay, or were you expecting a better relief than this? Share with us in the comment section below.
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