The government has proposed raising the highest income tax slab threshold for the salaried class from Rs. 4.1 million to Rs. 7 million annually, while also planning to abolish the 10 percent surcharge on top income earners, as part of a relief package expected to be unveiled in the upcoming federal budget for 2026-27.
Sources familiar with the budget discussions told ProPakistani the proposal to increase the top slab threshold is aimed at providing relief to upper-middle-income salaried individuals who have seen their tax burden rise sharply in recent years due to inflation-driven salary adjustments that pushed many into higher tax brackets without a corresponding increase in real purchasing power.
Under the proposed changes, the 10 percent surcharge currently imposed on individuals falling in the highest income bracket is also expected to be removed, effectively reducing the marginal tax rate for top earners.
However, sources added that tax slabs for individuals earning between Rs. 600,000 and Rs. 1.2 million annually are likely to remain unchanged, meaning those in the lower- and lower-middle-income brackets may not see any immediate relief in the upcoming budget.
The salaried class has long been considered one of the most heavily taxed segments of Pakistan’s formal economy, consistently contributing a disproportionate share of direct tax revenues while the agriculture, retail, and real estate sectors remain largely undertaxed.
Successive budgets have expanded the tax net primarily by increasing rates and lowering thresholds for documented, salaried individuals rather than bringing new sectors into the tax system.
The latest proposals suggest a partial course correction, though the relief is concentrated at the upper end of the income ladder.
