Starting July 1, 2025, salaried individuals in Pakistan will see a reduction in income tax rates under the newly announced federal budget for 2025-26. According to sources, a lower tax rate will now apply to those earning above Rs600,000 annually.
In the revised tax structure, individuals with annual incomes between Rs600,000 and Rs1,200,000 will now be taxed at just 1 percent.
For those earning Rs600,000 or less, the government has kept the current exemption in place. This decision is aimed at protecting lower-income earners from any added financial strain.
People with yearly incomes ranging from Rs1,200,000 to Rs2,200,000 will benefit from a reduced tax rate of 11 percent, which will apply only to the portion of income exceeding Rs1,200,000.
| Sr # | Taxable Income | Rate of Tax |
| 1. | Where taxable income does not exceed
Rs600,000 |
0% |
| 2. | Where taxable income exceeds Rs600,000
But does not exceed Rs1,200,000 |
1% of the amount exceeding
Rs600,000 |
| 3. | Where taxable income exceeds Rs. 1,200,000
But does not exceed Rs2,200,000 |
Rs6,000 + 11% of the amount exceeding
Rs1,200,000 |
| 4. | Where taxable income exceeds Rs2,200,000
But does not exceed Rs3,200,000 |
Rs116,000 + 23% of the amount exceeding
Rs2,200,000 |
| 5. | Where taxable income exceeds Rs3,200,000
But does not exceed Rs4,100,000 |
Rs346,000 + 30% of the amount exceeding
Rs3,200,000 |
| 6. | Where taxable income exceeds Rs4,100,000 | Rs616,000 + 35% of the amount exceeding
Rs4,100,000 |