Pakistanis, especially those earning a salary, may soon get some relief as the government plans to reduce income tax rates by 2.5% in the upcoming 2025–26 budget. This change is being considered because salaried workers have been heavily affected by high taxes.

The tax cut is part of a larger set of reforms being prepared before the new budget is announced. The goal is to ease the financial pressure on salaried individuals who regularly contribute to the country’s tax income.

According to sources, the government plans to lower the tax rate by 2.5% in each of the higher income brackets while keeping the current income levels for each bracket the same. For example, the highest tax rate would come down from 35% to 32.5%, and similar reductions would apply to other brackets as well.

Expected Tax Slabs after Budget 2025

Proposed Income Tax Brackets (Post 2.5% Rate Reduction)

The relief is being considered as salaried individuals are bearing brunt amid soaring taxes.

Furthermore, Pakistani government is also considering surge in the income tax exemption threshold, potentially increasing it from Rs6lac to Rs1 million. This would exempt more low-income earners from tax entirely.

Officials emphasized that despite these relief efforts, the government aims to keep the overall revenue impact neutral by balancing tax cuts with other proposed revenue measures and reductions in corporate and withholding tax rates.