Bangladesh maintains tax-free income limit for now, 5-year 'progressive' tax structure announced

The BNP government has also announced a “progressive” tax structure for the next five years so taxpayers can know what they will pay going forward

The BNP government has announced a “progressive” tax structure for the next five years in its budget for the upcoming fiscal year, but has maintained the tax-free income limit set by the interim government.

As a result, an individual will not have to pay any income tax for any income of Tk 375,000 earned between July 2025 to June 2026.

Income tax will have to be paid at a rate of 10 percent for the next Tk 300,000. This means the tax burden remains on people with limited incomes amid the ongoing inflationary pressures.

A taxpayer will have to file a return on this income in the 2026-27 fiscal year; which is called the tax year in income tax law.

Proposing a “progressive tax structure” for individual taxpayers for the next five years, Finance Minister Amir Khosru Mahmud Chowdhury said in his budget speech: "So that taxpayers can accurately predict the tax rate they will have to pay in the medium term, I am proposing the income tax rates for individual taxpayers for the next five years."

Tax-Free Income Limit

The finance minister said, "In consideration of the realities of inflation and the rising cost of living, I am proposing the following tax-free income limit for individual taxpayers for the next five years."

Tax Year	Tax-free Income Limit
2026-27 and 2027-28	Tk 375,000
2028-29 and 2029-30	Tk 400,000
2030-31	Tk 450,000

Tax-Free Income Limit for Special Categories

Special Category	Tax-free Income Limit
	2026-27 and 2027-28	2028-29 and 2029-30	2030-31
Women taxpayers and senior citizens of ages 65 and above	Tk 425,000	Tk 450,000	Tk 500,000
Third gender and people with disabilities	Tk 500,000	Tk 525,000	Tk 575,000
Gazetted war-wounded freedom fighters and gazetted ‘July Warriors’	Tk 525,000	Tk 550,000	Tk 600,000
Parents or legal guardians of people with disabilities	An additional Tk 50,000 for every disabled child or dependent

Under the five-year income tax plan presented in the budget, the tax-free income limit will remain unchanged for two years, will be raised by Tk 25,000 to Tk 400,000 for the two years after that, and then by another Tk 450,000 in FY2030-31.

The tax slabs and rate given by the government for the first two tax years have been kept unchanged, and the tax-free income limit has been increased by another Tk 25,000 to Tk 400,000 for the next two years. For the next tax year, the tax-free limit has been increased by Tk 50,000 to Tk 4.5 lakh.

The tax rate for the topmost tax slab will also be raised to 35 percent from FY2028-29.

(a) Tax Rates for Tax Year 2026-27 and 2027-28
Tax Slab	Tax Rate
On the first Tk 375,000 of total income	0
On the next Tk 300,000 of income	10 percent
On the next Tk 400,000 of income	15 percent
On the next Tk 500,000 of income	20 percent
On the next Tk 2,000,000 of income	25 percent
On income above TK 3,575,000	30 percent

(b) Tax Rates for Tax Year 2028-29 and 2029-30
Tax Slab	Tax Rate
On the first Tk 400,000 of total income	0
On the next Tk 300,000 of income	10 percent
On the next Tk 400,000 of income	15 percent
On the next Tk 500,000 of income	20 percent
On the next Tk 2,000,000 of income	25 percent
On the next Tk 26,400,000 of income	30 percent
On income above Tk 30,000,000	35 percent

(c) Tax Rates for Tax Year 2030-31
Tax Slab	Tax Rate
On the first Tk 450,000 of total income	0
On the next Tk 300,000 of income	10 percent
On the next Tk 400,000 of income	15 percent
On the next Tk 500,000 of income	20 percent
On the next Tk 2,000,000 of income	25 percent
On the next Tk 26,350,000 of income	30 percent
On income above Tk 30,000,000	35 percent