Pakistan’s federal budget for the 2025–26 fiscal year, unveiled by Finance Minister Muhammad Aurangzeb in the National Assembly on Tuesday, has brought a mix of targets, promises, and last-minute tweaks — especially for the country’s salaried class.
Growth and Revenue Goals Under IMF Oversight
The government is aiming for economic growth of 4.2% while pushing tax collection to a record Rs14,131 billion, nearly 9% higher than last year’s target. These numbers are being set against the backdrop of close International Monetary Fund monitoring, meaning revenue-raising measures are under particular scrutiny.
Tax Relief — With a Twist
Before the budget, officials had hinted at tax relief for salaried employees. However, the picture became a little more complicated after the cabinet decided to increase government employees’ salaries by 10% instead of the initially proposed 6%. This adjustment triggered a proposed increase in the income tax rate for individuals earning between Rs600,000 and Rs1.2 million annually — from the originally planned 1% to 2.5%.
That hike didn’t last long. Prime Minister Shehbaz Sharif later announced the rate would remain at 1%, rolling back the higher figure just days after the finance ministry defended it in its post-budget briefing.
Updated Tax Calculator Now Live
The official income tax calculator has been updated as of June 19, 2025, to reflect the final rates. Salaried individuals can now check exactly how much tax they will pay in the coming fiscal year based on the confirmed 1% rate for the Rs600,000–Rs1.2 million bracket.
In short: the government’s budget still aims for aggressive revenue collection, but at least for lower-middle-income earners, the tax hit is lighter than it almost became.
