The Federal Budget 2025-26 Pakistan income tax reforms have introduced major changes for salaried individuals, effective from July 1, 2025. With the aim of offering relief to middle and low-income groups, the government has revised tax slabs and proposed a salary increase for government employees. Here’s a breakdown of the new measures, including how they affect your take-home pay and how to use the latest income tax calculator 2025-26 to estimate your tax.
Relief for Salaried Class: Budget 2025-26 Income Tax Changes
The Pakistan budget 2025-26 income tax adjustments reflect a progressive approach, reducing tax liability for the middle-income class while ensuring high earners contribute more. The exemption threshold remains unchanged at PKR 600,000 per annum, but tax rates for the middle slabs have been significantly reduced.
According to the new structure under the Finance Act 2024, the tax for those earning between PKR 600,001 and PKR 1,200,000 is now just 1%, down from the previous 5%. Similarly, the tax rate for incomes between PKR 1,200,001 and PKR 2,200,000 has been brought down to 11% from 15%. The third slab (PKR 2.2M to PKR 3.2M) has also seen a reduction from 25% to 23%.
These reforms directly impact salaried individuals, especially those earning between PKR 50,001 to PKR 183,333 per month. The tax burden has been eased to improve disposable income, support consumption, and address rising inflation.
Income Tax Slabs for Salaried Individuals 2025-26
- Up to PKR 600,000/year (PKR 50,000/month): 0% tax
- PKR 600,001–1,200,000: 1% of the amount exceeding PKR 600,000
- PKR 1,200,001–2,200,000: PKR 6,000 + 11% of amount exceeding PKR 1,200,000
- PKR 2,200,001–3,200,000: PKR 116,000 + 23% of amount exceeding PKR 2,200,000
- PKR 3,200,001–4,100,000: PKR 350,000 + 30% of amount exceeding PKR 3,200,000
- Above PKR 4,100,000: PKR 620,000 + 35% of amount exceeding PKR 4,100,000
- Surcharge: 10% surcharge on income tax for those earning above PKR 10 million/year
This progressive tax structure reinforces the government’s focus on equitable revenue generation while easing pressure on low to mid-tier earners.
Salary Increase in Budget 2025-26 Pakistan
Alongside tax reforms, the salary increase in budget 2025-26 Pakistan is another key highlight. A proposed 10-15% hike for government employees aims to help offset inflation and improve economic resilience. For instance, a 15% raise on a PKR 1 million salary brings it to PKR 1.15 million, which under the new structure results in just PKR 5,500 tax compared to PKR 20,000 last year—substantial net relief.
Using the Salary Tax Calculator 2025
You can calculate your taxes using any salary tax calculator 2025 based on the new slabs. Top platforms include:
- TaxCalculator.pk
- PakTaxCalculator.pk
- Befiler.com
- TaxationPk.com
- Dawn.com
Just enter your salary, and the Pakistan budget 2025 26 income tax calculator will show your monthly and annual deductions.
Example Calculation:
Annual Salary: PKR 2,400,000
Tax: PKR 116,000 + 23% of (2.4M – 2.2M) = PKR 162,000/year or PKR 13,500/month
The budget 2025 26 Pakistan income tax reforms signal positive changes for the salaried class, especially those in the lower and middle-income brackets. While higher earners face increased contributions through surcharges, the overall structure remains progressive. For personalized planning, consult a tax professional and use the income tax calculator 2025-26 for accurate projections.
For detailed updates and tools, visit FBR.gov.pk or platforms like TaxationPk.com and Befiler.com.
