As Pakistan prepares its budget for the 2025-26 fiscal year, the government is considering tax relief for salaried workers. Early reports indicate that officials may raise the annual taxable income threshold from Rs600,000 to Rs800,000. This change aims to ease the financial burden faced by employees.
In addition to this adjustment, the government plans to revise existing income tax slabs. These proposals are still subject to approval by the International Monetary Fund (IMF), with whom the government is negotiating. Officials expect relief measures to focus mostly on lower-income earners, without immediate plans for higher-income benefits.
Currently, three proposals are under discussion. One proposal includes raising the income threshold for the first tax slab, which could impact individuals earning over Rs50,000 monthly. Moreover, the government plans to simplify the income tax return process to improve user-friendliness and transparency.
Additionally, a new taxation framework for higher-income pensioners is also being reviewed. Proposed tax rates may range from 5% to 20%, depending on the pensioner’s annual income. However, officials stress that these proposals are still in early stages and will undergo detailed review before final decisions are made.