Islamabad, May 12, 2025: In a promising move for Pakistan’s working professionals, the federal government is considering reducing income tax rates by as much as 10% for the salaried class in the 2025–26 budget.
However, this proposal hinges on a green light from the International Monetary Fund (IMF) during negotiations slated for May 14–22, 2025.
If approved, the tax relief could inject a substantial Rs. 50 billion back into the pockets of salary earners next fiscal year.
The proposal aims to ease the growing financial burden on middle- and high-income individuals, who have been contributing significantly to the national revenue.
According to Federal Board of Revenue (FBR) data, salaried taxpayers paid over Rs. 450 billion between July 2024 and April 2025.
This figure is projected to climb to Rs. 550 billion by June-end—underscoring the pivotal role this group plays in the country’s tax ecosystem.
Middle-income professionals earning between Rs. 200,000 and Rs. 300,000 monthly are currently subjected to effective tax rates of 40% to 45%, significantly higher than many regional counterparts.
For instance, comparable earners in India and Bangladesh face lower effective tax burdens, making this proposed relief a critical step toward regional parity.
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Moreover, high-income earners making over Rs. 1 million a month are burdened further with a 10% income surcharge in addition to their 40% tax rate—raising concerns about fair taxation and income equality.
A senior tax expert commenting on the proposal said, “The IMF’s approval will be vital, but this move signals the government’s recognition of the excessive pressure on salaried workers. It could also help stimulate domestic consumption if executed smartly.”
