Five-Year Roadmap for Tax-Free Income Limit To Hike
Representational image drwan by AI.
A five-year roadmap for the personal income tax threshold has been announced in the proposed national budget for the 2026-27 fiscal year. Under this, the tax-free income limit will be increased to Tk 4.5 lakh by the 2030-31 fiscal year.
If the budget is passed, taxpayers will have a clear idea about their future taxes, which will make the country's tax system more predictable and stable. However, experts say the impact of long-term inflation may not have been adequately reflected in this new tax limit.
In the proposed 2026-27 and the following 2027-28 fiscal years, the tax-free income limit will remain at Tk 3.75 lakh, the same as in the 2025-26 fiscal year. After that, it will be increased to Tk 4 lakh for the 2028-29 and 2029-30 fiscal years.
Finally, in the 2030-31 fiscal year, it will rise to Tk 4.5 lakh. Essentially, this sets the tax-free income limit for the next five years.
In the last budget, the interim government increased the tax-free income limit from Tk 3.5 lakh to Tk 3.75 lakh. This change was expected to take effect from the 2026-27 tax year, which will apply to the income of the current 2025-26 fiscal year.
According to the existing structure, for individual taxpayers, after the tax-free limit of Tk 3.75 lakh, a 10% tax is levied on the first Tk 3 lakh. Subsequently, a 15% tax is levied on the next Tk 4 lakh, 20% on Tk 5 lakh, and 25% on Tk 20 lakh. Any remaining income is taxed at a rate of 30%. However, from the next tax year, the maximum tax rate will be 35%. Additionally, some concessions are provided for women, senior citizens, and freedom fighters in tax payment.
