In a move that maintains the status quo amid rising living costs, Finance Adviser Dr Salehuddin Ahmed has decided not to increase the tax-free income limit for individual taxpayers in the upcoming fiscal year 2025–26, despite plans to raise it in future years.
The announcement was made during his budget speech on Monday (June 2), 2025, which was broadcast live on Bangladesh Television in the absence of a functioning parliament.
No relief for this year amid inflationary pressure
Despite calls from economists and civil society to adjust the threshold in response to rising inflation, the tax-free income limit for individual taxpayers will remain at Tk 350,000 per annum for FY 2025–26.
Special categories will retain their current exemptions:
- Women and senior citizens (aged 65+): Tk 400,000
- Persons with disabilities: Tk 475,000
- Gazetted war-wounded freedom fighters: Tk 500,000
- Third gender taxpayers: Tk 475,000
However, in a notable change, the government introduced a symbolic minimum tax of Tk 1,000 for new taxpayers, aimed at encouraging formal entry into the tax system without imposing heavy burdens.
Future increases announced
Looking ahead, Salehuddin announced that the tax-free income limit will be raised to Tk 375,000 for both FY 2026–27 and FY 2027–28, signalling a phased approach to tax relief.
For taxpayers who sustained injuries during the gazetted July Uprising of 2024, known as the “July Warriors”, the tax-free income has been set higher at Tk 5,25,000 as part of recognition and support for those affected by the political unrest.
He also reaffirmed existing provisions:
- For individual taxpayers and Hindu Undivided Family (HUF) taxpayers in FYs 2026–27 and 2027–28, the minimum tax amount is set at Tk 5,000 for those whose income exceeds the tax-free threshold, regardless of location or income bracket.
- The newly introduced Tk 1,000 minimum tax applies specifically to first-time taxpayers, easing their entry into the formal system.
Salehuddin emphasised the need to balance revenue generation with economic stability, particularly in light of high inflation and slow growth. “We are committed to making taxation fairer and more inclusive over time,” he said. “This year, we must maintain fiscal discipline while preparing for broader reforms in the coming years.”