The Finance Act 2026 changed salary tax for the first time in two years, and most salaried people in Pakistan will pay less from July 2026. The tax-free limit stays at Rs600,000 a year, but two middle brackets were cut, two new brackets were added, and the 9% surcharge on high earners was removed.
This guide sets out the income tax slabs 2026-27 for salaried individuals, shows how to work out your own tax with real examples, and explains what changed from last year.
Table of Contents
Income tax slabs 2026-27 for salaried individuals
The new rates apply to salary earned from 1 July 2026 to 30 June 2027, which is tax year 2027 in FBR terms. Your employer uses them to calculate the tax deducted from your pay each month.
- Up to Rs600,000: 0%
- Rs600,001 to Rs1,200,000: 1% of the amount above Rs600,000
- Rs1,200,001 to Rs2,200,000: Rs6,000 plus 11% of the amount above Rs1,200,000
- Rs2,200,001 to Rs3,200,000: Rs116,000 plus 20% of the amount above Rs2,200,000
- Rs3,200,001 to Rs4,100,000: Rs316,000 plus 25% of the amount above Rs3,200,000
- Rs4,100,001 to Rs5,600,000: Rs541,000 plus 29% of the amount above Rs4,100,000
- Rs5,600,001 to Rs7,000,000: Rs976,000 plus 32% of the amount above Rs5,600,000
- Above Rs7,000,000: Rs1,424,000 plus 35% of the amount above Rs7,000,000
The fixed amount in each slab is simply the total tax on all the income below it, so you only ever apply the higher rate to the part of your income that falls in that slab. Earning one rupee more never makes your whole salary taxed at a higher rate.
What changed from 2025-26
Three changes matter for most people:
- Lower middle rates. The slab that was taxed at 23% now pays 20%, and the slab that was taxed at 30% now pays 25%.
- Two new brackets. Instead of jumping to 35% above Rs4.1 million, income now passes through 29% and 32% brackets before reaching 35% above Rs7 million.
- No surcharge. Salaried people earning more than Rs10 million no longer pay the extra 9% surcharge on their tax.
The tax-free threshold of Rs600,000 a year (Rs50,000 a month) and the 1% and 11% slabs did not change. Someone earning Rs150,000 a month therefore pays the same as last year, while people earning more than Rs183,000 a month or so start to save.
Worked examples
These examples assume the salary is fully taxable. Allowances that are exempt, such as a qualifying medical allowance, reduce the figure the slabs are applied to.
Rs100,000 a month (Rs1.2 million a year). 1% of Rs600,000 = Rs6,000 a year, or Rs500 a month.
Rs150,000 a month (Rs1.8 million a year). Rs6,000 plus 11% of Rs600,000 = Rs6,000 + Rs66,000 = Rs72,000 a year, or Rs6,000 a month.
Rs250,000 a month (Rs3 million a year). Rs116,000 plus 20% of Rs800,000 = Rs116,000 + Rs160,000 = Rs276,000 a year, or Rs23,000 a month. Under last year’s slabs the same salary paid Rs300,000, so the saving is Rs24,000 a year.
Rs500,000 a month (Rs6 million a year). Rs976,000 plus 32% of Rs400,000 = Rs976,000 + Rs128,000 = Rs1,104,000 a year, or Rs92,000 a month. Last year this salary paid Rs1,281,000, so the saving is Rs177,000.
Rs1 million a month (Rs12 million a year). Rs1,424,000 plus 35% of Rs5 million = Rs1,424,000 + Rs1,750,000 = Rs3,174,000 a year, before any adjustments. Removing the surcharge makes the biggest difference at this level.
How to calculate your own salary tax
- Add up your annual taxable salary: basic pay plus taxable allowances and bonuses for the year.
- Find the slab your total falls into.
- Take the fixed amount for that slab.
- Subtract the slab’s starting point from your income and multiply the result by the slab’s rate.
- Add the two figures together. Divide by 12 for a rough monthly deduction.
If your income changes during the year, for example because of a raise or a bonus, your employer adjusts the monthly deductions so that the total for the year matches the annual tax.
Who counts as a salaried individual
The salaried slabs apply when salary makes up more than 75% of your taxable income. If more than a quarter of your income comes from business, freelancing, rent or other sources, the non-salaried rates apply instead, and their top rate is 45%. Rental income and some investment income are taxed under separate rules.
Freelancers who export IT services through proper banking channels fall under their own, much lower regime, so these slabs are not the right guide for them.
How your employer deducts the tax
Employers deduct income tax from salary each month and pay it to the FBR. At the end of the year they issue a certificate showing your total salary and the tax deducted. Keep it: you need it to file your return.
The tax deducted by your employer is not the end of the process. You still have to file an annual income tax return to be on the Active Taxpayer List, which affects many other taxes you pay, from property transfers to bank transactions. Our step-by-step guide to filing an income tax return on IRIS explains how.
Ways to reduce the tax you pay
There is limited room to lower salary tax legally, but a few options exist:
- Pension and retirement savings. Contributions to approved voluntary pension schemes can earn a tax credit, within limits set by law.
- Charitable donations. Donations to approved institutions can qualify for a tax credit.
- Correct treatment of allowances. Make sure your employer applies any exemptions you are entitled to, such as the medical allowance exemption where it applies.
Rules on credits and limits change from year to year, so check the current position with a tax adviser or the FBR before relying on them.
Super tax for very high earners
The Finance Act 2026 also abolished super tax for individuals and businesses with income up to Rs500 million. In practice this means almost no salaried person pays super tax any more, which was a common worry for senior professionals last year.
Income tax slabs 2026-27 versus your tax return this year
One source of confusion: the return you file in autumn 2026 is for tax year 2026, which covers income from July 2025 to June 2026. That return uses last year’s slabs. The new income tax slabs 2026-27 apply to salary earned from July 2026, and they will be reflected in the return you file in 2027.
The FBR extended the deadline for tax year 2026 returns to 15 October 2026.
Monthly salary tax at a glance
For a quick check, here is the approximate monthly salary tax under the income tax slabs 2026-27, assuming the full salary is taxable:
- Rs50,000 a month: no tax
- Rs75,000 a month: about Rs250
- Rs100,000 a month: about Rs500
- Rs150,000 a month: about Rs6,000
- Rs200,000 a month: about Rs13,000
- Rs300,000 a month: about Rs34,667
- Rs400,000 a month: about Rs62,000
- Rs500,000 a month: about Rs92,000
- Rs600,000 a month: about Rs124,500
These figures are annual tax divided by 12. Your payslip may differ slightly because of exempt allowances, bonuses paid in particular months, or adjustments your employer makes later in the year.
Common salary tax mistakes
- Assuming the whole salary is taxed at the top rate. Only the slice of income inside each slab is taxed at that slab’s rate.
- Ignoring bonuses. A large bonus is added to your annual income and can push part of it into a higher slab, so the tax deducted that month may look unusually high.
- Not filing a return because tax was already deducted. Deduction at source does not put you on the Active Taxpayer List. Filing does.
- Using last year’s slabs for the current year. Online calculators are not always updated. Check that any tool you use applies the 2026-27 rates.
- Forgetting other income. Rent, profit on savings or freelance income must be declared in your return even if your employer has handled your salary tax.
Official source: income tax slabs are set each year in the Finance Act. Check the current rates and your own tax position on the Federal Board of Revenue website before you file.
Frequently asked questions
What is the tax-free salary in 2026-27?
Rs600,000 a year, or Rs50,000 a month. Salary up to this amount is not taxed.
How much tax is deducted from a Rs100,000 monthly salary?
Rs500 a month, or Rs6,000 a year, assuming the whole salary is taxable.
Has the 9% surcharge been removed?
Yes. The Finance Act 2026 removed the surcharge that applied to salaried income above Rs10 million.
Do the new slabs apply to my current tax return?
No. They apply to income from July 2026. The return due in October 2026 uses the 2025-26 slabs.
Are non-salaried people taxed at the same rates?
No. Business individuals and associations of persons have a separate table with a top rate of 45%.
Sources: Finance Act 2026 slab tables as reported by Pakistan Observer, and the FBR’s deadline notification reported by Dawn. For more on how taxes affect property deals, see our guide to property tax in Islamabad.
