Tax-Free Income Threshold to Increase
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The government is set to introduce several changes to VAT and taxation through the Finance Bill, including an increase in the tax-free income threshold for individuals. The proposed budget had set the tax-free income limit at Tk 375,000 for fiscal years 2026-27 and 2027-28. That proposal is now being revised, with the threshold increasing to Tk 400,000 for the next two fiscal years (2026-27 and 2027-28).
The proposed budget had also announced that the tax-free income threshold would rise to Tk 400,000 in tax years 2028-29 and 2029-30. Under the revised plan, it will be increased to Tk 450,000 for those years, while the tax-free income limit will reach Tk500,000 in fiscal year 2030-31.
For the first time, the proposed budget introduced a five-year long-term income tax roadmap for individual taxpayers. As part of efforts to address inflation, rising living costs, and facilitate long-term financial planning for taxpayers, the government proposed setting tax-free income thresholds and tax rates in advance through tax year 2030-31.
The proposal also includes a gradual increase in the tax-free income threshold for third-gender taxpayers and taxpayers with disabilities, raising it to Tk 500,000, Tk 525,000, and Tk 575,000 respectively.
Similarly, the government has proposed increasing the tax-free income threshold for gazetted war-wounded freedom fighters and gazetted ‘July fighters’ of the mass uprising to Tk 525,000 in tax years 2026-27 and 2027-28, Tk 550,000 in tax years 2028-29 and 2029-30, and up to a maximum of Tk 600,000 in tax year 2030-31.
In addition, for the first time, special financial benefits have been proposed for parents or legal guardians of persons with disabilities. An additional Tk 50,000 of income per disabled child or dependent will be treated as tax-exempt.
