ISLAMABAD: The burdened salaried class is set to receive some much-needed relief, as the federal government today (on Saturday) announced a significant decrease in income tax rates for low and middle-income earners.
Finance Minister Muhammad Aurangzeb, speaking during a Senate session, revealed that the tax rate for individuals earning up to Rs1.2 million annually has been reduced from 5% to just 1%. He emphasized that the salaried segment faces both inflationary pressures and taxation, and this relief is in line with Prime Minister Shehbaz Sharif’s directives.
“The government has cut income tax on those earning between Rs600,000 and Rs1.2 million annually from the previously proposed 2.5% to a minimal 1%,” Aurangzeb said. He expressed hope that this measure would not only boost disposable income but also rebuild trust in the country’s tax system.
The Rs17.57 trillion federal budget for FY2025-26 features key tax concessions for salaried individuals. Originally, the government proposed reducing the tax rate for the Rs600,000–Rs1.2 million income bracket from 5% to 2.5%, but that has now been lowered further to 1%.
Additional tax relief measures include a reduction in the tax rate from 15% to 11% for those earning up to Rs2.2 million annually, and a decrease from 25% to 23% for individuals with incomes between Rs2.2 million and Rs3.2 million.
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