The Government of Pakistan has finalized the income tax slabs for salaried individuals for the fiscal year 2025-2026. The new tax structure, introduced through the Finance Act 2024, brings an increased tax burden, particularly for middle and high-income earners.
One of the significant changes is the rise in the tax rate for individuals earning between Rs. 600,000 and Rs. 1,200,000 per annum, which has now been set at 5%, up from the previous 2.5%. Despite inflationary pressures, the government has maintained six tax slabs while increasing the overall tax burden on salaried individuals.
Updated Income Tax Slabs for 2025-2026
| Taxable Income (Annual) | Rate of Tax |
|---|---|
| Up to Rs. 600,000 | 0% (Tax-Exempt) |
| Rs. 600,001 – Rs. 1,200,000 | 5% on income exceeding Rs. 600,000 |
| Rs. 1,200,001 – Rs. 2,200,000 | Rs. 30,000 + 15% on income exceeding Rs. 1,200,000 |
| Rs. 2,200,001 – Rs. 3,200,000 | Rs. 180,000 + 25% on income exceeding Rs. 2,200,000 |
| Rs. 3,200,001 – Rs. 4,100,000 | Rs. 430,000 + 30% on income exceeding Rs. 3,200,000 |
| Above Rs. 4,100,000 | Rs. 700,000 + 35% on income exceeding Rs. 4,100,000 |
Comparison with Previous Tax Slabs (2023-2024)
The following table presents a comparison of the previous year’s tax rates and the latest changes:
| Taxable Income (Annual) | Tax Rate (2023-2024) |
|---|---|
| Up to Rs. 600,000 | 0% (Tax-Exempt) |
| Rs. 600,001 – Rs. 1,200,000 | 2.5% on income exceeding Rs. 600,000 |
| Rs. 1,200,001 – Rs. 2,400,000 | Rs. 15,000 + 12.5% on income exceeding Rs. 1,200,000 |
| Rs. 2,400,001 – Rs. 3,600,000 | Rs. 165,000 + 22.5% on income exceeding Rs. 2,400,000 |
| Rs. 3,600,001 – Rs. 6,000,000 | Rs. 435,000 + 27.5% on income exceeding Rs. 3,600,000 |
| Above Rs. 6,000,000 | Rs. 1,095,000 + 35% on income exceeding Rs. 6,000,000 |
Impact of New Tax Rates
The revised tax structure primarily impacts high-income earners. For individuals earning at least Rs. 6 million annually (Rs. 500,000 per month), the tax obligation has increased by Rs. 22,500. Similarly, those earning up to Rs. 12 million annually (Rs. 1 million per month) will see an additional tax burden of Rs. 22,000.
Despite these changes, the income tax exemption threshold remains at Rs. 50,000 per month, ensuring that individuals earning below this amount are not affected. However, all other salaried individuals will face an increased tax liability. For example, an individual earning Rs. 100,000 per month will now pay Rs. 2,500 in tax, compared to Rs. 1,250 under the previous tax slabs.
These adjustments highlight the government’s approach to increasing revenue while balancing the tax burden across different income groups.