The federal government has proposed reducing income tax rates by up to 10 percent across various slabs for salaried individuals in the upcoming fiscal year 2025-26 budget, pending approval from the International Monetary Fund (IMF) during negotiations scheduled for May 14 to 22, 2025.

This proposed tax relief is expected to benefit salaried taxpayers by approximately Rs. 50 billion in FY26, providing much-needed financial easing amid ongoing economic challenges.

According to the Federal Board of Revenue (FBR), the salaried class has already contributed over Rs. 450 billion in taxes during the first ten months of the current fiscal year (July–April), with projections indicating this figure will reach Rs. 550 billion by the end of June 2025.

Middle-income earners with monthly salaries between Rs. 200,000 and Rs. 300,000 currently face effective tax rates of around 40 to 45 percent. Meanwhile, high-income individuals earning above Rs. 1 million per month are subject to an additional 10 percent surcharge on top of the 40 percent tax rate.