Budget 2026: Tax relief for salaried employees

Budget 2026: Tax relief for salaried employees

Finance Minister Senator Muhammad Aurangzeb announced income tax relief for salaried individuals while presenting the federal budget for 2026–27 in the National Assembly. The government also proposed ending the surcharge on salaried taxpayers.

Aurangzeb said the government recognizes the financial challenges faced by employees in both the public and private sectors. Following Prime Minister Shehbaz Sharif’s directives, the budget introduces lower tax rates and revised income tax slabs to ease the burden on salaried workers.

Under the proposed changes, individuals earning between Rs2.2 million and Rs3.2 million a year will pay a reduced tax rate of 20%, down from 23%. Their tax liability will be Rs116,000 plus 20% of the amount exceeding Rs2.2 million.

For annual incomes between Rs3.2 million and Rs4.1 million, the tax rate will decrease from 30% to 25%. Taxpayers in this bracket will pay Rs316,000 plus 25% of the amount above Rs3.2 million.

Those earning between Rs4.1 million and Rs5.6 million annually will benefit from a reduction in the tax rate from 35% to 29%. Their tax will be calculated at Rs541,000 plus 29% of the amount exceeding Rs4.1 million.