In a welcome development for Pakistan’s working population, the federal government is likely to offer significant relief to the salaried class in the upcoming fiscal year 2025-26 budget.
The move comes at a time when many households are struggling to keep up with rising inflation and economic challenges. According to government insiders, the final round of negotiations between Pakistan and the International Monetary Fund (IMF) is underway — with income tax reforms high on the agenda.
Prime Minister Shehbaz Sharif, who earlier instructed that relief measures be crafted for salaried individuals, was reportedly briefed that the government had collected higher-than-expected taxes from this segment during the current fiscal year. In light of this, the PM has shown keen interest in easing the burden on those who earn through fixed monthly wages.
What Could Change for Salaried Workers?
As per the budget proposals being discussed:
- Annual income up to Rs1 million (approx. Rs83,000 per month) could be made tax-free, up from the current threshold of Rs600,000 annually — a move that would benefit a large portion of middle-income earners.
- For those earning Rs100,000 per month, the income tax rate is proposed to be reduced to 2.5% from the current 5%.
- Individuals earning Rs183,000 per month may see their income tax rate capped at 12.5%, making a noticeable difference in monthly take-home salaries.
- Meanwhile, those earning Rs267,000 per month could benefit from a tax cut to 22.5%, down from 25% currently.
Relief for Corporate Sector Also on the Table
In addition to salaried workers, the corporate sector might also see tax relief in the form of lower income tax rates, while a 0.5% cut in super tax is also under serious consideration.
A Sign of Hope for the Middle Class
If approved, these measures could offer much-needed breathing room for the salaried middle class, many of whom have been feeling squeezed by stagnant wages and increasing living costs. For professionals, teachers, government employees, and private sector workers, this proposed relief is not just a financial break — it’s a recognition of their consistent contribution to the national tax pool.
While the final decision rests on the outcome of talks with the IMF, the proposed tax reforms are being seen as a step toward creating a fairer and more balanced taxation system — one that doesn’t overburden those with fixed incomes.
The federal budget for FY2025-26 is expected to be unveiled in June, and all eyes are now on whether this promising relief becomes a reality for Pakistan’s hardworking salaried class.
