Salaried Employees Face New Income Tax Slabs

Islamabad-(MudassarIqbal)-The federal government has introduced revised income tax slabs for the salaried class under the Finance Bill 2025–26, providing relief to low-income earners while increasing the tax burden on high-income professionals and pensioners.

As per the bill approved by the National Assembly on Thursday, individuals earning up to Rs600,000 annually will continue to be exempt from income tax. Those earning above this threshold will be subject to progressive tax rates, with higher rates applied to higher income brackets.

National Assembly Approves Rs17.57 Trillion Budget for FY26

1. Income up to Rs600,000/year
   0% income tax (fully exempt)
2. Income from Rs600,001 to Rs1,200,000/year
   1% income tax on the amount exceeding Rs600,000
3. Income from Rs1,200,001 to Rs2,200,000/year
   Fixed tax: Rs6,000
   Plus 11% tax on the amount exceeding Rs1.2 million
4. Income from Rs2,200,001 to Rs3,200,000/year
   Fixed tax: Rs116,000
   Plus 23% tax on the amount exceeding Rs2.2 million
5. Income from Rs3,200,001 to Rs4,100,000/year
   Fixed tax: Rs346,000
   Plus 30% tax on the amount exceeding Rs3.2 million
6. Income above Rs4,100,000/year
   Fixed tax: Rs616,000
   Plus 35% tax on the amount exceeding Rs4.1 million

As part of a significant new measure, the Finance Bill 2025–26 proposes a 5% income tax on annual pension receipts exceeding Rs10 million. Pensioners receiving up to Rs10 million per year will remain exempt. The move aims to expand the tax net to include high-income retirees while maintaining relief for average pensioners.

The National Assembly has approved the federal budget for the fiscal year 2025–26. The Finance Bill was passed by a majority vote during a session chaired by Speaker Sardar Ayaz Sadiq. Clause-by-clause approval was granted, while all cut motions moved by the opposition were rejected.

Following the approval of the bill, the session was adjourned until 11 a.m. tomorrow.