Income Tax Slabs 2025 – 2026: A Comprehensive Review
Pakistan’s federal budget for the fiscal year 2025 – 2026 has brought rays of hope for salaried individuals, with the government gave some significant income tax relief measures.
By revising tax slabs and reducing rates, the Finance Act 2025 – 26 aims to ease the financial burden on low and middle-income earners while addressing economic challenges.
However, not everyone is convinced of the relief’s impact. In this blog post, we’ll break down the new income tax slabs, explore the changes, and discuss what they mean for Pakistan’s salaried class.
Overview of the 2025 – 2026 Income Tax Relief
Finance Minister Muhammad Aurangzeb presented the federal budget on June 10, 2025, emphasizing support for salaried individuals who have long borne a heavy tax burden.
The government has introduced a revised tax structure, slashing rates across various income brackets to provide financial relief.
According to reports, the relief is substantial for low-income earners, with tax cuts of up to 80% for those earning between Rs. 600,000 and Rs. 1.2 million annually, while higher earners above Rs. 4.1 million see minimal relief of around 3%.
The sources highlights that the government proposed up to a 4% income tax cut for lower and middle-income sectors, alongside a 10% pay raise and a 7% pension increase for government employees.
These measures are part of a broader effort to stimulate economic growth while managing a projected tax collection target of Rs. 14.131 trillion for FY26.
New Income Tax Slabs for 2025 – 2026
While exact tax slab details may vary slightly across sources, the revised structure focuses on reducing rates for salaried individuals. Based on the Finance Act 2025 – 26, here’s a simplified overview of the changes:
| Monthly Taxable Salary | Annual Salary | Total Tax 2025 | Total Tax 2026 | Monthly Tax 2025 | Monthly Tax 2026 | (Decrease Per Month) |
| 50,000 | 600,000 | – | – | – | – | |
| 100,000 | 12,00,000 | 30,000 | 6,000 | 2,500 | 500 | (2,000) |
| 150,000 | 18,00,000 | 120,000 | 72,000 | 10,000 | 6,000 | (4,000) |
| 200,000 | 24,00,000 | 230,000 | 162,000 | 19,167 | 13,500 | (5,667) |
| 225,000 | 27,00,000 | 305,000 | 231,000 | 25,417 | 19,250 | (6,167) |
| 250,000 | 30,00,000 | 380,000 | 300,000 | 31,667 | 25,000 | (6,667) |
| 300,000 | 36,00,000 | 550,000 | 466,000 | 45,833 | 38,833 | (7000) |
| 350,000 | 42,00,000 | 735,000 | 651,000 | 61,250 | 54,250 | (7000) |
| 400,000 | 48,00,000 | 945,000 | 861,000 | 78,750 | 71,750 | (7000) |
| 450,000 | 54,00,000 | 11,55,000 | 10,71,000 | 96,250 | 89,250 | (7000) |
| 500,000 | 60,00,000 | 13,65,000 | 12,81,000 | 113,750 | 106,750 | (7000) |
| 550,000 | 66,00,000 | 15,75,000 | 14,91,000 | 131,250 | 124,250 | (7000) |
| 600,000 | 72,00,000 | 17,85,000 | 17,01,000 | 148,750 | 141,750 | (7000) |
| 800,000 | 96,00,000 | 26,25,000 | 25,41,000 | 218,750 | 211,750 | (7000) |
| 10,00,000 | 1,20,00,000 | 38,11,500 | 36,92,850 | 317,625 | 307,738 | (9,888) |
| 15,00,000 | 1,80,00,000 | 61,21,500 | 59,81,850 | 510,125 | 498,488 | (11,638) |
| 20,00,000 | 2,40,00,000 | 84,31,500 | 82,70,850 | 702,625 | 689,238 | (13,388) |
| 25,00,000 | 2,00,00,000 | 10,741,500 | 10,559,850 | 895,125 | 879,988 | (15,138) |
| 28,00,000 | 3,36,00,000 | 12,127,500 | 11,933,250 | 10,10,625 | 994,438 | (16,188) |
| 30,00,000 | 3,60,00,000 | 13,051,500 | 12,848,850 | 10,87,625 | 10,70,738 | (16,888) |
- Annual Income Rs. 600,000 – Rs. 1.2 million: Tax rates reduced by up to 80%, offering significant relief for low-income salaried workers.
- Annual Income Rs. 1.2 million – Rs. 4.1 million: Progressive reductions in tax rates, with middle-income earners benefiting from cuts designed to boost disposable income.
- Annual Income Above Rs. 4.1 million: Limited relief, with tax cuts capped at approximately 3% to maintain revenue collection from higher earners.
The National Assembly’s Standing Committee on Finance also approved amendments, reducing the tax rate for incomes between Rs. 600,000 and Rs. 1.2 million from 2.5% to 1%, as confirmed by Prime Minister Shehbaz Sharif.
Challenges and Criticisms
Beyond the tax relief, the budget has sparked debate over its broader implications.
The Policy Research and Advisory Council (PRAC) praised certain measures but raised concerns about the budget’s failure to address industrial sector challenges, which could exacerbate unemployment and economic instability.
For salaried individuals, the real test will be whether the tax relief translates into tangible financial stability amid these broader economic dynamics.
Conclusion: A Step Forward, but Questions Remain
The income tax slabs for 2025-2026 mark a significant effort to support Pakistan’s salaried class, particularly low and middle-income earners.
With reduced rates and targeted relief, the government aims to ease financial pressures while pursuing ambitious revenue goals.
Whether this relief proves transformative or falls short will depend on its implementation and the broader economic context in FY26.