Islamabad, June 26, 2025 – The government has introduced significant changes to the income tax structure under the amended Finance Bill 2025-26, offering relief to low-income earners while revising tax slabs for higher earners to ensure a progressive taxation system.
The revised bill exempts individuals earning up to Rs600,000 annually from income tax, providing substantial relief to low-income salaried workers. For those earning between Rs600,001 and Rs1.2 million per year, a minimal 1% income tax will apply.
Higher earners face new tax slabs:
- Rs1.2M–Rs2.2M: A fixed tax of Rs6,000 plus 11% on income exceeding Rs1.2 million.
- Rs2.2M–Rs3.2M: A fixed tax of Rs116,000 plus 23% on income above Rs2.2 million.
- Rs3.2M–Rs4.1M: A fixed tax of Rs346,000 plus 30% on income exceeding Rs3.2 million.
- Above Rs4.1M: A fixed tax of Rs616,000 plus 35% on income beyond Rs4.1 million.
Additionally, a 35% tax rate applies to all salaried individuals earning over Rs4.1 million annually. These changes aim to balance fiscal responsibility with economic relief for lower-income groups, aligning with the government’s efforts to promote equitable taxation.
