By:Ibrahim Aftab
In a major move to ease financial pressure on the salaried class, the federal government has proposed significant income tax cuts in the 2025–26 budget—offering reductions of up to 4% across several income brackets.
Individuals earning between Rs600,000 and Rs1.2 million annually will see their tax rate drop sharply from 5% to just 1%. For those earning up to Rs100,000 per month, this reduces the total annual tax from Rs30,000 to Rs6,000. Those earning up to Rs2.2 million per year will benefit from a 4% cut, bringing their rate down from 15% to 11%.
People with incomes up to Rs3.2 million will see their tax rate drop from 25% to 23%. High-income earners—those making over Rs10 million annually—will get a 1% reduction in the current surcharge.
Finance Minister Muhammad Aurangzeb stated that the government’s goal is to strike a balance between inflation and take-home pay, noting that the prime minister has consistently pushed for tax relief for salaried individuals.
Despite paying Rs331 billion in taxes in just eight months—1,350% more than retailers—the salaried class has seen little relief in recent years. The government’s proposal aims to address this long-standing imbalance.
