In income tax rates through different blocks for the salaried class in the upcoming budget, the federal government has planned up to a 10% tax relief. Approval is subject to the International Monetary Fund (IMF) in discussions starting this week.

10% Tax Relief Proposed for Salaried Workers

In FY26 benefit of approximately Rs. 50 billion relief is expected to be provided to a salaried individual. Meetings between Pakistan and the IMF are arranged to take place from May 14 to 22, 2025.

Up to Rs. 1 million from income tax, there is a proposal to exempt annual income. The foundation behind this suggestion, as per sources in the Federal Board of Revenue (FBR), is that the revenue generated from income tax on salaries has exceeded expectations, creating room for such relief.

In the corporate income tax rate, FBR is also considering a reduction, said sources. To decrease the super tax rate by half a percent, the proposal is also available.

On the import of raw materials, the applications also include a probable reduction in input withholding taxes and the complete elimination of withholding tax. FBR is considering eliminating the federal excise duty on the buying and selling of property.

In the current fiscal year, in the initial ten months of (July–April), the salaried class has already contributed over Rs. 450 billion in taxes. FBR evaluated that this amount will reach Rs. 550 billion by the end of June 2025.

Monthly salaries ranging people between Rs. 200,000 and Rs. 300,000 paid effective tax rates of around 40–45 percent by those middle-class earners. Higher-income individuals earning above Rs. 1 million per month are subject to a 10 percent surcharge alongside their 40 percent tax rate.