As Pakistan readies its federal budget for the 2025–26 fiscal year, early developments suggest that the government is planning some relief measures for salaried individuals.
Insiders say one of the main proposals under consideration is raising the annual income limit for taxable salaries from Rs600,000 to Rs800,000.
This means people earning under the new threshold may not have to pay any income tax. Additionally, changes to the current tax brackets are being discussed to ease the load on working professionals.
However, these potential changes still require a green light from the International Monetary Fund (IMF), as talks with the lender are ongoing.
The Federal Board of Revenue (FBR) has hinted that only the lower-tier tax brackets will likely see changes, with no immediate relief planned for higher-income earners.
Among the three proposals currently being debated, one involves adjusting the first tax slab to affect those earning just over Rs50,000 a month.
There are also plans to simplify how people file their taxes, making the process easier and more transparent.
Another key area being examined is taxation for pensioners. Under new proposals, pension incomes up to Rs800,000 a year may be taxed at 5%.
Those earning between Rs800,001 and Rs1.5 million might be taxed at 10%, while pensioners with incomes ranging from Rs1.5 million to Rs2 million could face a 12.5% tax.
Incomes between Rs2 million and Rs3 million may fall under a 15% tax rate, and pensions over Rs3 million annually could be taxed at 20%.
Officials have stressed that all these suggestions are still being reviewed and nothing has been finalized yet. More clarity is expected as consultations continue and the government prepares to present the final budget later this year.