Pakistan’s Finance Act 2026 changed the income tax slabs for salaried individuals from 1 July 2026. Rates were reduced for annual incomes between Rs 2.2 million and Rs 7 million, and the 9% surcharge on salary income above Rs 10 million was abolished. This guide explains the slabs for FY 2026-27, how the progressive system works and what it means for different salaries.
This article is for education only. Tax rules can change and personal situations differ, so please confirm details with the Federal Board of Revenue (FBR) or a qualified tax professional.
Salary Tax Slabs for FY 2026-27
These slabs apply to salaried individuals for income earned from July 2026 onward. Income earned from July 2025 to June 2026 is assessed under the previous year’s slabs when the annual return is filed.
| Annual taxable income (Rs) | Tax |
|---|---|
| Up to 600,000 | 0% |
| 600,001 to 1,200,000 | 1% of the amount above 600,000 |
| 1,200,001 to 2,200,000 | Rs 6,000 + 11% above 1,200,000 |
| 2,200,001 to 3,200,000 | Rs 116,000 + 20% above 2,200,000 |
| 3,200,001 to 4,100,000 | Rs 316,000 + 25% above 3,200,000 |
| 4,100,001 to 5,600,000 | Rs 541,000 + 29% above 4,100,000 |
| 5,600,001 to 7,000,000 | Rs 976,000 + 32% above 5,600,000 |
| Above 7,000,000 | Rs 1,424,000 + 35% above 7,000,000 |
What Changed This Year?
- The slab structure moved from six slabs to eight.
- Rates were reduced for incomes between Rs 2.2 million and Rs 7 million a year. For example, income between Rs 2.2 million and Rs 3.2 million is now taxed at 20% instead of 23%.
- Income between Rs 4.1 million and Rs 5.6 million is taxed at 29% instead of 35%.
- The 9% surcharge on salary income above Rs 10 million was abolished.
- The first two slabs (0% up to Rs 600,000 and 1% up to Rs 1.2 million) did not change.
How Progressive Tax Works
Tax is not charged at one rate on your whole salary. Only the part of income that falls inside each slab is taxed at that slab’s rate. Here is a worked example for a monthly salary of Rs 250,000:
- Yearly salary: Rs 250,000 × 12 = Rs 3,000,000.
- This falls in the Rs 2.2 million to Rs 3.2 million slab.
- Tax = Rs 116,000 + 20% of (3,000,000 − 2,200,000) = Rs 116,000 + Rs 160,000 = Rs 276,000 a year.
- Monthly tax = Rs 276,000 ÷ 12 = Rs 23,000.
Estimated Tax at Common Salary Levels
These figures cover salary income tax only. They ignore allowances, rebates and exemptions that may apply to you.
| Monthly salary | Yearly tax | Tax per month | Effective rate |
|---|---|---|---|
| Rs 50,000 | Rs 0 | Rs 0 | 0% |
| Rs 100,000 | Rs 6,000 | Rs 500 | 0.5% |
| Rs 150,000 | Rs 72,000 | Rs 6,000 | 4.0% |
| Rs 250,000 | Rs 276,000 | Rs 23,000 | 9.2% |
| Rs 400,000 | Rs 744,000 | Rs 62,000 | 15.5% |
| Rs 600,000 | Rs 1,494,000 | Rs 124,500 | 20.8% |
Try It With Your Own Salary
Use our salary after tax calculator, choose Pakistan, and enter your monthly or yearly gross salary to see the estimated tax and take-home pay. To understand gross and net pay better, read Gross Salary vs Net Salary. Once you know your take-home pay, plan it with a monthly budget.
Frequently Asked Questions
Is the first Rs 600,000 of salary tax-free?
Yes. Under the slabs above, annual taxable income up to Rs 600,000 is taxed at 0%.
Does my employer deduct the tax?
Employers generally deduct income tax from salaries and deposit it with the tax authority. Your payslip shows the amount deducted.
Why is my payslip different from these figures?
Allowances, exemptions, rebates, bonuses and the exact timing of payments can change your actual tax. These examples use simplified assumptions.
Where can I confirm the official rates?
The Federal Board of Revenue (FBR) publishes official tax rates and the Finance Act on its website. Please check there or ask a qualified tax adviser before filing your return.
This article is for educational purposes only and is not tax advice.
