The government is considering major tax relief measures for high-income salaried individuals in the upcoming federal budget 2026–27, including a significant increase in the top income tax slab threshold and the removal of the surcharge on the highest earners.

According to sources familiar with budget deliberations, the highest salary tax bracket may be revised upward from Rs. 4.1 million to Rs. 7 million annually. The move is aimed at easing the burden on upper-middle and high-income professionals whose nominal salaries have risen due to inflation, pushing them into higher tax brackets without a real increase in purchasing power.

Officials are also reportedly considering abolishing the 10 percent surcharge currently applied to top income earners, which would further reduce the effective tax burden on the highest slab of salaried taxpayers.

At the same time, tax slabs for individuals earning between Rs. 600,000 and Rs. 1.2 million annually are expected to remain unchanged, meaning lower- and middle-income salaried groups may not receive immediate relief in the upcoming budget.

The salaried class continues to be one of the most heavily taxed segments of Pakistan’s documented economy, contributing a disproportionate share of direct tax revenue compared to other sectors, while large parts of the economy remain under-taxed.

Successive budgets have largely relied on increasing compliance and tightening rates for documented salaried individuals, rather than broadening the tax base to include untaxed sectors such as retail, agriculture, and real estate.

The latest proposals signal a partial shift in policy focus, though the expected relief appears concentrated at the higher end of the income spectrum.