From Tax Reforms to the New Rial: What’s in Iran’s 1405 Budget Bill
WANA (Dec 23) – Iran’s budget bill for the year 1405 (2026–2027), submitted by President Masoud Pezeshkian’s administration, was formally received by the Iranian Parliament today.
Drafted with a contractionary approach, the bill has been presented with the stated goals of curbing the budget deficit, controlling inflation, and addressing Iran’s deep-rooted structural economic imbalances. According to observers, it is set to become one of the government’s most consequential economic documents in the year ahead.
Initial details suggest the government has sought to restrain rapid growth in public spending and send a clear signal of fiscal discipline to markets and economic actors. Downsizing the overall budget framework and limiting high-cost commitments are described as core pillars of the proposal.
On the revenue side, the bill places strong emphasis on increasing sustainable income sources and reducing reliance on oil revenues. Expanding the tax base, combating tax evasion, and digitizing the tax collection system are among the key measures outlined—an approach that reflects the government’s broader effort to reform the budget structure and reduce vulnerability to external shocks.
The development (capital expenditure) section of the 1405 budget has also been drafted cautiously. Funds are largely allocated to unfinished projects, priority schemes, and projects with high physical completion rates—an attempt to prevent the dispersion of resources and improve the efficiency of public investment.
Iran’s budget bill for the year 1405 (2026–2027), submitted by President Masoud Pezeshkian’s administration, was formally received by the Iranian Parliament. Social media /WANA News Agency
Higher Tax Exemptions and a Redesigned Income Tax Ladder
Under the proposed bill, the annual income tax exemption ceiling would rise to 480 million tomans (approximately $3,700 per year), marking a 66.6 percent increase compared to the previous year.
If approved, monthly incomes below 40 million tomans (around $308 per month) would be fully exempt from income tax. Progressive tax brackets would then apply, with rates rising up to 30 percent for monthly incomes exceeding 140 million tomans (roughly $1,075 per month). The government says these changes are intended to support lower-income groups and enhance tax equity.
Wage Increases and Social Support
The bill proposes a 20 percent increase in salaries for government employees, retirees, conscripted soldiers, and beneficiaries of social assistance programs. In addition, funding equivalent to around 100 billion tomans (approximately $770,000) has been allocated for employee compensation, signaling an effort to preserve the purchasing power of wage earners amid persistent inflation.
Iran’s budget bill for the year 1405 (2026–2027), submitted by President Masoud Pezeshkian’s administration, was formally received by the Iranian Parliament. Social media /WANA News Agency
The 1405 Budget in “New Rials”
One of the most notable features of the bill is that it has been prepared using the “new rial,” following the removal of four zeros from Iran’s national currency. This marks the first time an annual budget has been officially drafted and submitted to Parliament using the new monetary unit.
According to government officials, all revenue lines, expenditure items, and macro-level budget tables have been recalculated under the new numerical format. If fully approved and implemented, the shift could simplify financial calculations and enhance the transparency of budgetary documents.
Overall, Iran’s 1405 budget bill can be seen as an attempt to shrink the state’s fiscal footprint, rein in both hidden and explicit deficits, and send a signal of fiscal discipline to Iran’s economy. As parliamentary review begins, its details are likely to become one of the most significant—and contentious—economic debates in the country over the coming year.
Four Zeros Gone: Iran’s Currency Surgery Amid Soaring Inflation
WANA (Oct 05) – Iran has embarked on a major monetary overhaul: Parliament has approved the removal of four zeros from the rial. From now on, each “new rial” will equal 10,000 current rials, and its subunit will be called “the qeran”. A measure debated for years in economic and political circles has now been […]
