In a major shake-up to the country’s tax structure, the federal government has rolled out new income tax slabs for the salaried class in the Finance Bill 2025-26, offering long-awaited relief to low-income earners while increasing the pressure on high-income professionals and wealthy pensioners.

According to the bill passed by the National Assembly on Thursday, individuals earning up to Rs600,000 annually will remain fully exempt from income tax. This move is being seen as a significant step to ease the financial load on the lower-middle class. But the story doesn’t end there — those with higher incomes will now find themselves in progressively steeper tax brackets, making it clear that the government is shifting focus toward taxing high-income individuals more heavily.

What’s new in the tax slabs?

Here’s a quick breakdown of the revised income tax slabs for salaried class under the new bill:

• Income up to Rs600,000/year – 0% tax

• Income from Rs600,001 to Rs1,200,000/year – 1% tax on the amount exceeding Rs600,000

• Income from Rs1,200,001 to Rs2,200,000/year – Rs6,000 fixed tax + 11% on the amount exceeding Rs1.2 million

• Income from Rs2,200,001 to Rs3,200,000/year – Rs116,000 fixed tax + 23% on the amount exceeding Rs2.2 million

• Income from Rs3,200,001 to Rs4,100,000/year – Rs346,000 fixed tax + 30% on the amount exceeding Rs3.2 million

• Income above Rs4,100,000/year – Rs616,000 fixed tax + 35% on the amount exceeding Rs4.1 million

This structured system ensures that the higher your earnings, the greater your contribution. The idea behind this progressive taxation approach is to balance economic inequality while boosting national revenue.

Wealthy pensioners also in the spotlight

For the first time, the government has turned its attention toward the pension sector. Under the Finance Bill 2025-26, pensioners receiving more than Rs10 million annually will now be subject to a 5% income tax. However, those drawing pensions below this mark will remain untouched. This policy aims to rope in high-value pension income without affecting the average retiree.

The proposal is expected to spark debate, as it introduces a new layer of accountability in a previously untaxed segment of the population. By taxing high-income individuals, including affluent pensioners, the government hopes to broaden the tax base and promote fiscal responsibility.

The Finance Bill 2025-26 was passed with a majority vote during a session chaired by Speaker Sardar Ayaz Sadiq. Opposition parties attempted to push back with cut motions, but all were rejected in a clause-by-clause approval process. Following the bill’s approval, the National Assembly session was adjourned until 11am the next day.