The federal government is considering several tax relief measures for salaried individuals in Budget 2026-27, raising hopes of lower tax payments for thousands of employees across the country.

According to sources, proposals under review include reducing income tax rates and increasing the number of income tax slabs to provide relief to middle- and higher-income earners. However, individuals earning up to Rs 183,000 per month are unlikely to receive significant benefits under the current proposals.

Sources said tax relief is being considered mainly for salaried employees earning more than Rs 183,000 per month. One of the key recommendations is to increase the number of income tax slabs from six to eight, a move aimed at creating a more gradual tax structure.

Another proposal suggests a 5 percent reduction in the tax rate for individuals earning around Rs 267,000 per month. If approved, the applicable tax rate for this income bracket could fall from 25 percent to 20 percent.

In another major development, the maximum income tax rate for salaried individuals may be reduced from 35 percent to 30 percent. The proposal is being viewed as an effort to ease the tax burden on formal-sector employees amid rising living costs and inflationary pressures.

Sources added that the final decision on tax relief measures will be taken by the federal cabinet. Any approved changes will become part of the Budget 2026-27 proposals and will be presented as part of the government's broader economic strategy.

Tax experts say the proposed measures could improve disposable income for salaried workers and encourage greater tax compliance if implemented effectively.