The Government of Pakistan has suggested a 27.5 percent income tax for individuals who earn a monthly salary of Rs. 333,000 or more in the Federal Budget for 2025–26. This initiative is aimed at improving revenue collection and fulfilling commitments made to the IMF.
Officials indicate that the new tax rate is aimed at high-income earners within the salaried class. The intention is to create a more equitable tax system by increasing contributions from those with a greater capacity to pay, while attempting to shield lower and middle-income households from additional financial strain.
In the past, an annual income of up to Rs 1.2 million was exempt from taxation. However, under the new proposals, this threshold may be lowered, though official confirmation is still pending.
This announcement has sparked concerns among professionals who believe the salaried class is already facing challenges due to inflation and increasing living expenses. Many are calling on the government to implement relief measures alongside the new tax to prevent placing an excessive burden on honest taxpayers.
The proposal is included in the Finance Bill for 2025–26 and will take effect once approved by Parliament. Further details are anticipated to be released in the upcoming days.
