The International Monetary Fund (IMF) and the Government of Pakistan are on the verge of reaching an agreement to reduce income tax rates for the salaried class in the upcoming 2025–26 federal budget.

During detailed negotiations held on Friday night between IMF officials and the Federal Board of Revenue (FBR), the IMF gave broad approval to a proposal aimed at easing the tax burden on salaried individuals across multiple income brackets. The proposed adjustments are expected to provide relief amounting to approximately Rs. 56–60 billion in the next fiscal year, according to a report by The News.

One of the major suggestions includes reducing the income tax rate for the first slab—covering annual earnings from Rs. 600,000 to Rs. 1.2 million—from the current 5 percent to just 1 percent. Under this plan, individuals earning Rs. 100,000 annually would see their tax obligation drop from Rs. 30,000 to Rs. 6,000. However, the IMF has suggested a compromise rate of 1.5 percent, translating to Rs. 9,000 in tax.

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For higher income groups, the FBR has proposed a 2.5 percent reduction in each slab, along with a cut in the top tax rate from 35 percent to 32.5 percent. Final figures are still being refined in consultation with the IMF.

Additionally, the IMF has advocated for a phased rationalisation of the 10 percent surcharge and Super Tax imposed on higher-income earners and corporations.

Meanwhile, the IMF expressed criticism over Pakistan’s recent decision to allocate 2,000 megawatts of electricity for cryptocurrency mining. The Fund pointed out that the decision was taken without prior approval from the Energy Ministry and the National Electric Power Regulatory Authority (NEPRA), raising concerns about governance and policy coordination.