Salary Income Tax Pakistan 2026-27 — New Slabs, Calculator & Examples
Complete guide to Pakistan's new salaried income tax slabs for FY 2026-27 (effective July 1, 2026) — 8 slabs from 0% to 35%, abolished surcharge, real-world examples, and how to calculate your exact take-home pay.
Finance Act 2026 (Budget 2026-27) delivers the most significant income tax relief for salaried Pakistanis in years. From July 1, 2026, eight revised tax slabs replace the old structure — cutting rates by 3 to 6 percentage points across the middle income bands.
This guide covers the exact slabs, how to calculate your tax, real-world examples, and what your employer needs to do from July onward.
New Salaried Tax Slabs (FY 2026-27)
Effective July 1, 2026:
| Slab | Annual Income (PKR) | Tax Calculation |
|---|---|---|
| 1 | Up to Rs. 600,000 | Nil |
| 2 | Rs. 600,001 – Rs. 1,200,000 | 1% on income exceeding Rs. 600,000 (max Rs. 6,000) |
| 3 | Rs. 1,200,001 – Rs. 2,200,000 | Rs. 6,000 + 11% on excess over Rs. 1,200,000 |
| 4 | Rs. 2,200,001 – Rs. 3,200,000 | Rs. 116,000 + 20% on excess over Rs. 2,200,000 |
| 5 | Rs. 3,200,001 – Rs. 4,100,000 | Rs. 316,000 + 25% on excess over Rs. 3,200,000 |
| 6 | Rs. 4,100,001 – Rs. 5,600,000 | Rs. 541,000 + 29% on excess over Rs. 4,100,000 |
| 7 | Rs. 5,600,001 – Rs. 7,000,000 | Rs. 976,000 + 32% on excess over Rs. 5,600,000 |
| 8 | Above Rs. 7,000,000 | Rs. 1,424,000 + 35% on excess over Rs. 7,000,000 |
The 9% surcharge on income above Rs. 10 million is also abolished.
Old vs New: How Much Did Rates Change?
| Annual Income Range | Old Rate (FY 2025-26) | New Rate (FY 2026-27) | Change |
|---|---|---|---|
| Up to Rs. 600,000 | 0% | 0% | No change |
| Rs. 600K – Rs. 1.2M | 5% | 1% | -4 pp |
| Rs. 1.2M – Rs. 2.2M | 15% | 11% | -4 pp |
| Rs. 2.2M – Rs. 3.2M | 25% | 20% | -5 pp |
| Rs. 3.2M – Rs. 4.1M | 30% | 25% | -5 pp |
| Rs. 4.1M – Rs. 5.6M | 35% | 29% | -6 pp |
| Rs. 5.6M – Rs. 7.0M | 35% | 32% | -3 pp |
| Above Rs. 7.0M | 35% + 9% surcharge | 35% (no surcharge) | Effective cut |
The biggest cuts are in the Rs. 4–6M annual income band (mid-to-senior professionals). The top rate stays at 35% but loses the 9% surcharge — giving high earners real relief too.
Monthly Salary Quick Reference
| Monthly Gross Salary | Annual Income | Monthly Tax (New) | Monthly Tax (Old) | Monthly Saving |
|---|---|---|---|---|
| Rs. 50,000 | Rs. 600,000 | Rs. 0 | Rs. 0 | Rs. 0 |
| Rs. 60,000 | Rs. 720,000 | Rs. 100 | Rs. 500 | Rs. 400 |
| Rs. 80,000 | Rs. 960,000 | Rs. 300 | Rs. 1,500 | Rs. 1,200 |
| Rs. 100,000 | Rs. 1,200,000 | Rs. 500 | Rs. 2,500 | Rs. 2,000 |
| Rs. 120,000 | Rs. 1,440,000 | Rs. 720 | Rs. 3,500 | Rs. 2,780 |
| Rs. 150,000 | Rs. 1,800,000 | Rs. 1,100 | Rs. 7,500 | Rs. 6,400 |
| Rs. 200,000 | Rs. 2,400,000 | Rs. 2,633 | Rs. 15,000+ | Rs. 12,000+ |
| Rs. 250,000 | Rs. 3,000,000 | Rs. 5,133 | Rs. 21,500+ | Rs. 16,000+ |
| Rs. 300,000 | Rs. 3,600,000 | Rs. 8,383 | Rs. 29,500+ | Rs. 21,000+ |
| Rs. 400,000 | Rs. 4,800,000 | Rs. 16,466 | Rs. 41,500+ | Rs. 25,000+ |
| Rs. 500,000 | Rs. 6,000,000 | Rs. 22,300 | Rs. 52,500+ | Rs. 30,000+ |
Approximate figures. Use the Tax Calculator for exact calculations.
Step-by-Step: How to Calculate Your Annual Salary Tax
Example 1 — Monthly salary Rs. 150,000 (Annual Rs. 1,800,000)
Step 1: Annual income = Rs. 1,800,000
Step 2: Which slab?
- Slab 3: Rs. 1,200,001 – Rs. 2,200,000
- Rs. 6,000 + 11% on (Rs. 1,800,000 − Rs. 1,200,000)
- Rs. 6,000 + 11% × Rs. 600,000
- Rs. 6,000 + Rs. 66,000
- Annual tax = Rs. 72,000
Step 3: Monthly WHT = Rs. 72,000 ÷ 12 = Rs. 6,000/month
Old tax (FY25-26): Rs. 30,000 + 15% × Rs. 600,000 = Rs. 120,000/year = Rs. 10,000/month
Annual saving: Rs. 48,000 (Rs. 4,000/month)
Example 2 — Monthly salary Rs. 250,000 (Annual Rs. 3,000,000)
Step 1: Annual income = Rs. 3,000,000
Step 2: Slab 4: Rs. 2,200,001 – Rs. 3,200,000
- Rs. 116,000 + 20% on (Rs. 3,000,000 − Rs. 2,200,000)
- Rs. 116,000 + 20% × Rs. 800,000
- Rs. 116,000 + Rs. 160,000
- Annual tax = Rs. 276,000
Monthly WHT = Rs. 23,000/month
Old tax: Rs. 180,000 + 25% × Rs. 800,000 = Rs. 380,000/year = Rs. 31,667/month
Annual saving: Rs. 104,000 (Rs. 8,667/month)
Example 3 — Monthly salary Rs. 500,000 (Annual Rs. 6,000,000)
Step 1: Annual income = Rs. 6,000,000
Step 2: Slab 7: Rs. 5,600,001 – Rs. 7,000,000
- Rs. 976,000 + 32% on (Rs. 6,000,000 − Rs. 5,600,000)
- Rs. 976,000 + 32% × Rs. 400,000
- Rs. 976,000 + Rs. 128,000
- Annual tax = Rs. 1,104,000
Monthly WHT = Rs. 92,000/month
Old tax (at 35% across most of this): would have been ~Rs. 1,400,000 + 9% surcharge on large portion = ~Rs. 160,000/month
Annual saving: ~Rs. 816,000+
What Counts as “Salary Income”?
The salaried slab applies to income from employment, including:
✅ Basic salary
✅ Allowances (house rent, medical, transport, special)
✅ Bonuses and performance pay
✅ Benefits in kind (company car, housing — at prescribed rates)
✅ Employer contributions to provident fund (above threshold)
✅ Gratuity and leave encashment
Exempt from salary income tax:
- Employer contribution to recognized provident fund (within limits)
- Medical allowance up to Rs. 10% of basic salary or Rs. 144,000/year (lower of the two)
- Conveyance allowance for official duties
- Zakat deducted at source (reduces taxable income)
Allowances: Fully Taxable vs Exempt
| Allowance | Tax Treatment |
|---|---|
| Basic salary | Fully taxable |
| House rent allowance (HRA) | Fully taxable |
| Medical allowance | Exempt up to 10% of basic or Rs. 144,000 (lower) |
| Transport allowance (personal commute) | Taxable |
| Company vehicle (private use) | Taxable at notional value |
| EOBI contribution by employee | Not deductible |
| Provident fund (employee’s own contribution) | Deductible within limits |
What Your Employer Must Do from July 1
Your employer is legally required to:
- Update payroll software to reflect new FY 2026-27 slabs from July 1 salary onwards
- Recalculate annual tax for each employee based on their projected full-year salary under new slabs
- Deduct correct monthly WHT (Section 149 of Income Tax Ordinance)
- Issue revised salary slips showing updated tax deduction
- Issue Form 16 (Employer Certificate) at year-end for your tax return
If your July 2026 salary does not reflect the lower tax, raise it immediately with your Payroll/HR team — non-compliance with revised slabs from July 1 is technically a penalty-incurring offense for employers.
Verify Your Tax with Our Calculator
Use the Tax Calculator on our homepage to:
- Enter your monthly gross salary
- Select “Salaried” and FY 2026-27
- Instantly see annual tax, monthly WHT, and effective tax rate
Also try the Salary Slip Generator to generate a complete take-home salary breakdown including EOBI, provident fund, and net salary.
Frequently Asked Questions
I earn Rs. 50,000/month — do I pay tax?
No. Rs. 50,000 × 12 = Rs. 600,000 annual income. The tax-free threshold is Rs. 600,000. You owe no income tax. But you should still file a return to maintain ATL status.
My employer says the new slabs don’t apply until the annual return — is that correct?
No. Employers must apply the new slabs to monthly withholding tax deductions from July 1, 2026 onwards. The annual return reconciles any difference, but the deduction itself should update immediately.
What if I have two jobs?
Each employer deducts WHT independently. Your total income from both jobs is aggregated in your annual return. If you are in a higher slab when combined, you may owe additional tax; if less, you get a credit.
Does the 9% surcharge abolition affect me?
Only if your annual income exceeds Rs. 10 million (Rs. 83,333/month). Below that, the 9% surcharge never applied to you.
Based on Finance Act 2026 (Finance Bill 2026-27). New slabs effective July 1, 2026. For educational purposes only, not tax advice. Consult a qualified tax advisor for complex situations.
HisaabKar Editorial Team
M.Phil Economics · Verified Financial Content
This guide is researched and maintained by economists with formal training in Pakistani public finance and macroeconomics. All data is sourced from official government publications (FBR, SBP, PBS, PMEX). Learn about our credentials →