Income tax slabs 2026-27 Pakistan: the rates, worked out on your salary

If you are on a salary in Pakistan, these are the six numbers that decide your tax bill for the year that started on 1 July 2026. The Finance Act 2026 restructured the salary slabs: two middle rates came down, two new intermediate bands were added, and the 35 percent top rate now starts at Rs 7 million instead of Rs 4.1 million.

Every salaried person earning above Rs 2.2 million a year pays less tax this year than last year on the same salary.

The income tax slabs for 2026-27

These rates apply to tax year 2027, which runs from 1 July 2026 to 30 June 2027, for individuals whose salary is more than 75 percent of taxable income.

The exemption threshold is unchanged at Rs 600,000 a year, or Rs 50,000 a month.

Put your own figure into the income tax calculator rather than doing this by hand.

What changed from last year

Four things:

1. The 23 percent slab became 20 percent.
2. The 30 percent slab became 25 percent.
3. Two new bands were inserted above Rs 4.1 million, at 29 percent and 32 percent, where previously everything above Rs 4.1 million was taxed at 35 percent.
4. The 35 percent rate now begins at Rs 7 million rather than Rs 4.1 million.

The Finance Bill 2026 also amended section 4AB so that no surcharge is payable. The 9 percent surcharge that applied to higher salaried incomes in the previous year is gone.

What it saves you, in rupees

Compared with the tax year 2026 slabs on the same salary:

Below Rs 2.2 million a year nothing changed. The relief is concentrated between Rs 3 million and Rs 7 million, which is where most mid-career private sector and senior government salaries sit.

Set against inflation of 11.1 percent in August, a Rs 49,000 saving on a Rs 3.6 million salary is worth about 1.4 percent of gross pay. It is real, and it is smaller than the increase in your fuel and electricity bills over the same period.

How to work out your own tax, step by step

1. Start with gross annual salary. Basic pay plus all allowances plus bonus plus any taxable perquisite, for the twelve months from July to June.
2. Take out the exempt parts. The most common are gratuity from an approved fund, an approved provident fund contribution within limits, and medical reimbursement up to 10 percent of basic salary where the employment contract provides it. What remains is your taxable income.
3. Find your slab in the table above. Use the annual figure, not the monthly one.
4. Apply the fixed amount plus the percentage. On Rs 3.6 million: Rs 316,000 plus 25 percent of Rs 400,000, which is Rs 416,000.
5. Divide by 12 to see what your employer should deduct each month. On Rs 3.6 million that is Rs 34,667 a month.
6. Check it against your salary slip. If the deduction is materially different, ask payroll which figure they are using as taxable income.

Our salary breakdown calculator does steps 3 to 5 for you, and the freelancer tax calculator covers you if part of your income is not salary.

Filing: the dates and the fee

• The tax year ends 30 June 2027.
• The return filing deadline for salaried individuals is normally 30 September following the year end, so 30 September 2027 for this year. FBR has extended this date in several recent years, but plan for the deadline, not the extension.
• Filing a return is free through the IRIS portal at iris.fbr.gov.pk. Anyone charging you to file is selling you a service, not a requirement.
• For the year just ended, tax year 2026, the deadline has already passed. A late return still gets you onto the Active Taxpayer List, but with a surcharge for late filing.

Why filer status is worth more than the slab change

The tax you pay on salary is deducted at source whether you file or not. What filing buys you is a lower withholding rate everywhere else. Non-filers pay roughly double on cash withdrawals above the threshold, on vehicle registration and token tax, on property transfers and on dividends and profit on bank deposits.

For a household that buys a car and transfers a plot in the same year, the gap between filer and non-filer withholding is usually larger than the entire slab reduction described above. See what the difference costs you on the cash withdrawal tax calculator, the token tax calculator and the property tax calculator.

The mistakes that cost people money

• Using the monthly figure in the slab table. The bands are annual. A Rs 200,000 monthly salary is Rs 2.4 million a year, which is the 20 percent band, not the 1 percent one.
• Forgetting bonus and arrears. They are taxable in the year received and can push you into the next band for that year.
• Assuming the whole salary is taxed at the slab rate. It is not. Only the amount above the band floor is taxed at that rate, on top of the fixed amount.
• Not filing because tax was already deducted. Deduction is not filing. Without a return you are not on the Active Taxpayer List, and you pay non-filer rates on everything else.
• Missing the September deadline and then not filing at all. Filing late is far better than not filing.
• Paying an agent to do a free filing. IRIS registration and return filing cost nothing.

Where these figures come from

The slab table is the revised Division I, Part I of the First Schedule to the Income Tax Ordinance 2001 as substituted by the Finance Act 2026, effective 1 July 2026. FBR's own budget salient features confirm the restructuring: intermediate slabs added and the 35 percent threshold raised from Rs 4.1 million to Rs 7 million.

If your own position is unusual, for example you have foreign income, more than one employer in the same year, or a large non-salary component, check with a tax practitioner. We are not tax advisers and this is not tax advice.