Income tax slabs 2026-27 for salaried people in Pakistan, explained
Work it out with the Salary tax calculator →
In 2026-27 (tax year 2027), salary up to Rs 600,000 a year, or Rs 50,000 a month, is not taxed. Above that the rate starts at 1% and rises to 35% on income above Rs 7 million a year. The Finance Act 2026 cut the middle rates and removed the 9% surcharge on high salaries.
Income tax slabs for salaried people, 2026-27
These rates are in the First Schedule of the Income Tax Ordinance (Part I, Division I, clause 2) and apply to salary earned from 1 July 2026 to 30 June 2027.
| Annual taxable salary | Annual tax |
|---|---|
| Rs 0 to Rs 600,000 | No tax |
| Rs 600,001 to Rs 1,200,000 | 1% of the amount above Rs 600,000 |
| Rs 1,200,001 to Rs 2,200,000 | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| Rs 2,200,001 to Rs 3,200,000 | Rs 116,000 + 20% of the amount above Rs 2,200,000 |
| Rs 3,200,001 to Rs 4,100,000 | Rs 316,000 + 25% of the amount above Rs 3,200,000 |
| Rs 4,100,001 to Rs 5,600,000 | Rs 541,000 + 29% of the amount above Rs 4,100,000 |
| Rs 5,600,001 to Rs 7,000,000 | Rs 976,000 + 32% of the amount above Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% of the amount above Rs 7,000,000 |
These slabs apply only if your salary is more than 75% of your total taxable income. If rent, business or freelance income makes up a bigger share, the non-salaried slabs apply instead, and those rates are higher.
How slab tax is worked out
The most common misunderstanding is that moving into a higher slab taxes your whole salary at the higher rate. It does not. Each slab carries a fixed amount, which is the tax on the slabs below it, and the slab rate applies only to the part of your income above that slab’s starting point.
- Multiply your monthly taxable salary by 12 to get your annual salary.
- Find the slab it falls in using the table above.
- Annual tax = the slab’s fixed amount + (annual salary − the slab’s starting point) × the slab rate.
- Divide by 12 for the monthly deduction.
Worked examples
Rs 100,000 a month
The annual salary is Rs 1,200,000, which falls in the 1% slab: 1% × (1,200,000 − 600,000) = Rs 6,000 a year, or Rs 500 a month. This is the same as last year.
Rs 200,000 a month
The annual salary is Rs 2,400,000, which falls in the 20% slab: Rs 116,000 + 20% × (2,400,000 − 2,200,000) = Rs 156,000 a year, or Rs 13,000 a month. In 2025-26 this slab was taxed at 23% and the tax was Rs 13,500 a month, so you now save Rs 500 a month.
Rs 500,000 a month
The annual salary is Rs 6,000,000, which falls in the 32% slab: Rs 976,000 + 32% × (6,000,000 − 5,600,000) = Rs 1,104,000 a year, or Rs 92,000 a month. That is about 18.4% of the salary, not 32%. In 2025-26 the same salary paid Rs 106,750 a month.
Tax at common salaries: 2026-27 and 2025-26
| Monthly salary | Monthly tax 2026-27 | Monthly tax 2025-26 | Take-home |
|---|---|---|---|
| Rs 50,000 | Rs 0 | Rs 0 | Rs 50,000 |
| Rs 100,000 | Rs 500 | Rs 500 | Rs 99,500 |
| Rs 150,000 | Rs 6,000 | Rs 6,000 | Rs 144,000 |
| Rs 200,000 | Rs 13,000 | Rs 13,500 | Rs 187,000 |
| Rs 300,000 | Rs 34,667 | Rs 38,833 | Rs 265,333 |
| Rs 500,000 | Rs 92,000 | Rs 106,750 | Rs 408,000 |
| Rs 1,000,000 | Rs 264,500 | Rs 307,108 | Rs 735,500 |
Notice how the effective rate, which is your total tax divided by your salary, stays well below the top slab rate. At Rs 200,000 a month it is 6.5%, at Rs 500,000 it is 18.4%, and even at Rs 1,000,000 a month it is about 26.5%, not 35%. Salaries up to Rs 150,000 a month pay the same tax as last year, because the first three slabs did not change.
Work out your exact figure with the salary tax calculator.
What changed from 2025-26
- The Rs 600,000 tax-free limit and the first three slabs (0%, 1% and 11%) are unchanged.
- The Rs 2.2 million to Rs 3.2 million slab drops from 23% to 20%.
- The Rs 3.2 million to Rs 4.1 million slab drops from 30% to 25%.
- 35% used to start at Rs 4.1 million. Now income from Rs 4.1 million to Rs 5.6 million is taxed at 29%, Rs 5.6 million to Rs 7 million at 32%, and only income above Rs 7 million at 35%.
- The 9% surcharge on salaried people with taxable income above Rs 10 million is gone.
| Annual taxable salary (2025-26) | Annual tax |
|---|---|
| Rs 0 to Rs 600,000 | No tax |
| Rs 600,001 to Rs 1,200,000 | 1% of the amount above Rs 600,000 |
| Rs 1,200,001 to Rs 2,200,000 | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| Rs 2,200,001 to Rs 3,200,000 | Rs 116,000 + 23% of the amount above Rs 2,200,000 |
| Rs 3,200,001 to Rs 4,100,000 | Rs 346,000 + 30% of the amount above Rs 3,200,000 |
| Above Rs 4,100,000 | Rs 616,000 + 35% of the amount above Rs 4,100,000 |
Surcharge
Section 4AB adds a surcharge of 10% of the slab tax for individuals and AOPs with taxable income above Rs 10 million. In 2025-26 salaried people paid it at 9%. After the Finance Act 2026, no surcharge is payable by an individual with salary income. For example, a Rs 1,000,000 monthly salary now pays Rs 264,500 a month in tax, against about Rs 307,108 last year including the surcharge.
How to check the tax on your payslip
Under section 149, your employer deducts tax from each salary payment at your average rate on the salary it expects to pay you over the whole tax year, and corrects any shortfall or excess from earlier months as the year goes on.
- Find your taxable salary on the payslip. It may be lower than your gross pay if some items are exempt.
- Multiply it by 12 (add any bonus you expect this year) and work out the annual tax as shown above.
- Divide by 12 and compare it with the income tax line on your payslip.
- If it differs, look for the reason: you joined mid-year, got a raise or bonus, had a previous employer this year, or claimed a tax credit, such as for donations (section 61) or a pension fund (section 63), which your employer adjusts only when you give it proof.
- After the year ends, ask your employer for the certificate of tax deducted (section 164) and use that figure in your return.
Common mistakes
- Assuming a higher slab taxes your whole salary at the higher rate.
- Working out the tax on gross pay instead of taxable salary.
- Using the salaried slabs when rent or freelance income is more than a quarter of your income. Check with the rental income tax calculator and the freelancer tax calculator.
- Not filing a return because tax was already deducted. Returns are due by 30 September each year (for tax year 2026, FBR extended this to 15 October 2026), and a late return means a penalty and a later place on the ATL. See how to become a filer.
Frequently asked questions
What is the tax-free salary limit for 2026-27?
Taxable salary up to Rs 600,000 a year (Rs 50,000 a month) is taxed at 0% in 2026-27. This limit did not change from 2025-26.
If my salary crosses into a higher slab, is all of it taxed at the higher rate?
No. Each slab adds a fixed amount for the income below it, and the higher rate applies only to the part of your salary above the slab’s starting point. A raise never lowers your take-home pay.
Is there still a surcharge on high salaries?
No. The Finance Act 2026 changed section 4AB so that no surcharge is payable by an individual with salary income. In 2025-26 salaried people with taxable income above Rs 10 million paid a 9% surcharge. Other individuals and AOPs above Rs 10 million still pay a 10% surcharge.
My employer deducts tax every month. Do I still need to file a return?
Yes, if your taxable income for the year is above Rs 600,000 (section 114). Filing on time also keeps you on the Active Taxpayers List, which lowers the tax you pay on property, cars, savings and more. See how to become a filer.
What is the difference between 2026-27 and tax year 2027?
They are the same period. FBR names a tax year after the calendar year in which it ends, so tax year 2027 runs from 1 July 2026 to 30 June 2027. The return for it is due after 30 June 2027.
I also earn rent or freelance income. Which slabs apply?
The salaried slabs apply only when salary is more than 75% of your taxable income. Otherwise all your income is taxed under the higher non-salaried slabs. Use the rental income tax calculator or the freelancer tax calculator to check.
Calculators for this guide
- Salary tax calculatorCalculate your monthly income tax and take-home salary under the 2026-27 budget, and see how much you save compared with 2025-26.
- Rental income tax calculatorEstimate income tax on rent from a house, flat or shop for 2026-27, with the repairs allowance, salaried or non-salaried slabs and tenant deduction under section 155.
- Freelancer tax calculatorWork out the final tax on IT and freelance export income received through a bank: 0.25% with PSEB registration or 1% without, compared with normal income tax rates.
Sources
- Income Tax Ordinance 2001 as amended up to 30 June 2026 (FBR): First Schedule Part I Division I clause (2) salaried Table, section 4AB, section 114, section 149, section 164
- FBR Circular No. 02 of 2026-27 (8 September 2026): Finance Act 2026 salaried rates and withdrawal of the 9% surcharge (paras 7-8)
- FBR Circular No. 01 of 2025-26: Finance Act 2025 salaried rates (para 5), used for the comparison
- FBR Circular No. 3 of 2026-27 (30 September 2026): return deadline for tax year 2026 extended to 15 October 2026
This guide explains the rules for general information. It is not official, legal or tax advice. Rules change, so check the official source or a qualified professional before acting. See how we check our information.