The upcoming federal budget for 2025-26 is expected to include significant relief measures for salaried individuals, with a key focus on easing the tax burden.
According to sources within the Federal Board of Revenue (FBR), the government is planning to reduce income tax rates by at least 2.5% for higher income slabs of salaried persons. These adjustments are part of a broader effort to maintain a balanced revenue impact while providing necessary relief to taxpayers.
In the forthcoming budget, the government may introduce new taxation measures totaling approximately Rs500–600 billion. However, this increase is expected to be offset by targeted relief, particularly aimed at the salaried class, to ensure that the net effect on revenue remains minimal. This strategy reflects a shift towards creating a more equitable tax structure while encouraging compliance and economic participation among the middle class.
The authorities are also considering a reduction in withholding tax rates and a cut in the corporate income tax rate as part of the comprehensive relief strategy. These measures, alongside the tax relief for salaried individuals, are designed to maintain revenue neutrality. If successfully implemented, the overall impact of taxation and relief measures could result in no major change to the total revenue in the next fiscal year.
Revenue from the salaried segment has consistently exceeded expectations in the current fiscal year. This trend has encouraged policymakers to reward this group with meaningful tax cuts. The government is currently finalizing calculations to implement a 2.5% reduction in each of the higher income slabs applied to salaried taxpayers. These adjustments are being carefully evaluated to ensure fiscal responsibility while offering substantial relief.
Additionally, there is a proposal to increase the income tax exemption threshold under the Income Tax Ordinance, 2001. The current threshold of Rs600,000 may be raised to Rs1 million, providing further relief to low- and middle-income earners. This measure would significantly ease the financial burden on the general public, particularly the salaried population.
Another consideration for the 2025-26 budget is the possible reduction or removal of the Super Tax, which has been a longstanding demand from the business community. If approved, these reforms would collectively benefit both the salaried class and corporate sector, supporting economic stability and growth.