Wealthy taxpayers get reprieve with maximum rate unchanged at 25%

A new slab for top earners will be added in FY 2025-26, with a 30 percent tax

The highest income tax rate has remained unchanged at 25 percent in the upcoming 2024-25 fiscal year, despite Finance Minister AH Mahmood Ali’s proposal to raise it to 30 percent.

Parliament passed the new Finance Bill on Saturday, incorporating the changes to ease the tax burden.

Top earners have received a one-year reprieve. The highest tax rate will be 30 percent from FY 2025-26.

Ali has not raised the tax-free income limit in the new budget despite inflationary pressure and financial crunch.

He also provided some relief to middle-income taxpayers through adjustments in the tax regime.

Under the Finance Act, income up to Tk 350,000 will not be taxed. The next Tk 100,000 of income will be taxed at a rate of 5 percent.

Previously, a 10 percent tax was imposed on income between Tk 450,000 and Tk 750,000. Now, it will be applicable for up to Tk 850,000 income.

For income from Tk 850,000 to Tk 1.35 million, the tax will be 15 percent. Previously, income from Tk 750,000 to Tk 1.15 million was taxed at 15 percent.

As per the 2023-24 fiscal year's budget, a 20 percent tax rate applies to income between Tk 1.15 million and Tk 1.65 million. This time, a 20 percent tax rate will apply to income between Tk 1.35 million and Tk 1.85 million.

Finally, a 25 percent tax rate will apply to any remaining income after Tk 1.85 million.