Pakistan’s Salaried Class Loses Nearly 50% of Purchasing Power in 4 Years
Pakistan’s salaried middle class has suffered a nearly 50% loss in purchasing power over the past four years, despite salary hikes meant to offset inflation. While gross salaries have increased by 56% from 2022 to 2025, surging inflation and rising taxes—up by around 165%—have drastically reduced real income.
The most severe hit came in 2024, when a 15% salary increase was overshadowed by high inflation, effectively wiping out over Rs. 1.3 million from the average annual income. In 2025 alone, income taxes for those earning Rs. 2.24 million annually have risen by more than 44%.
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Looking ahead, the federal government is considering tax relief in the 2025–26 budget, potentially saving salaried individuals between Rs. 25,000 and Rs. 190,000 annually. The proposed cuts would apply to those earning between Rs. 1.2 million and Rs. 7.8 million annually. Salaries up to Rs. 600,000 will remain tax-exempt, and there are discussions about raising this exemption to Rs. 1 million.
As of April 2025, salaried workers have already paid over Rs. 450 billion in taxes, with projections reaching Rs. 550 billion by June. Tax burdens are particularly high for mid-level earners, with effective rates reaching 40–45%, while high-income earners face additional surcharges.
