TLDR:
• No tax on Rs. 50k salary
• Middle earners get major relief
• New slabs cut top rates
ISLAMABAD (The Thursday Times) — The federal government has tabled its budget for the upcoming fiscal year, delivering major tax relief to Pakistan’s salaried class. In a sweeping revision of tax slabs, significant reductions have been announced, particularly for low to middle-income earners, as Islamabad aims to ease the financial pressure on formal sector workers.
Major shift in tax slabs
The government’s restructured tax regime proposes a more lenient burden for earners across various brackets. Monthly salaries up to Rs50,000 are now completely exempt from income tax. Those earning between Rs51,000 and Rs100,000 will pay a nominal 1% tax. This signals a direct benefit to a substantial portion of the urban workforce, many of whom fall within these earning ranges.
تنخواہ دار طبقے پر ٹیکسوں پر بوجھ کم کرتے ہوئے ریلیف دیا جارہا ہے؛
بارہ لاکھ تک تنخواہ لینے والوں پر ٹیکس کی شرح5 فیصد سے کم کرکے ڈھائی فیصد کردی گئی ہے۔
بائیس لاکھ تک تنخواہ لینے والوں پر ٹیکس کی شرح 15 فیصد سے کم کرکے 11 فیصد کی تجویز ہے۔ pic.twitter.com/ZNJZrO3YVo— The Thursday Times (@thursday_times) June 10, 2025
This adjustment marks a notable deviation from previous years, where even modest salaries were taxed at higher proportional rates. The shift is seen as an effort to formalise earnings, encourage transparency, and expand the tax base by easing entry-level compliance pressure.
Mid-income earners see reduced rates
For those earning between Rs100,001 and Rs183,000 per month, the income tax rate has been cut from 15% to 11%. Meanwhile, the bracket covering salaries from Rs183,001 to Rs266,000 will now be taxed at 23%, down from 25%.
These cuts are likely to be welcomed by professionals in sectors like education, healthcare, banking, and public service — many of whom fall into these middle-income groups. The relief may also help counter inflationary pressures, particularly in urban areas where cost of living has spiked sharply over the past year.
Annual slabs realigned
On an annual basis, those earning Rs1.2 million will now pay just Rs6,000 in tax, a dramatic fall from the previous Rs30,000. Incomes up to Rs2.2 million will see a tax rate reduction from 15% to 11%, while the Rs2.2 to Rs3.2 million range will now be taxed at 23%, previously 25%.
This move represents a recalibration of tax burden distribution, particularly beneficial to dual-income households and experienced professionals. The sharp fall in tax on Rs1.2 million income, for example, is especially significant for early-career individuals, a demographic often overlooked in fiscal planning.∎
