Income tax on salary in Pakistan 2026-27: slabs explained with examples at every income level
The new salary tax slabs 2026-27 cut rates for middle and upper earners and remove the surcharge for salaried people. Here is how the eight bands work, what your employer should deduct each month, and how much you actually take home.
By Adnan Naseem · Published 17 October 2026 · Last checked October 2026
Contents
For tax year 2027 (1 July 2026 to 30 June 2027), salary up to Rs 600,000 a year is tax-free. Above that, rates rise through eight slabs: 1%, 11%, 20%, 25%, 29%, 32% and finally 35% on income above Rs 7 million. Each rate applies only to the slice of salary inside its band. There is no surcharge for salaried individuals this year. On Rs 150,000 a month, tax is Rs 6,000 a month.
One term to get right before the numbers: Pakistan's tax year is named after the June in which it ends. Tax year 2027 is the same thing as "2026-27" or "FY27". Salary you earned from July 2025 to June 2026 belongs to tax year 2026 and uses last year's slabs.
What changed in 2026-27
The Finance Act, 2026 kept the lower three bands as they were and rebuilt everything above Rs 2.2 million a year. The old system had six slabs with a 35% rate starting at Rs 4.1 million. The new one has eight slabs, and 35% now starts at Rs 7 million.
| Annual taxable salary (Rs) | TY 2026 rate | TY 2027 rate | Change |
|---|---|---|---|
| Up to 600,000 | 0% | 0% | No change |
| 600,001 – 1,200,000 | 1% | 1% | No change |
| 1,200,001 – 2,200,000 | 11% | 11% | No change |
| 2,200,001 – 3,200,000 | 23% | 20% | 3 points lower |
| 3,200,001 – 4,100,000 | 30% | 25% | 5 points lower |
| 4,100,001 – 5,600,000 | 35% | 29% | 6 points lower |
| 5,600,001 – 7,000,000 | 35% | 32% | 3 points lower |
| Above 7,000,000 | 35% | 35% | Same rate, starts later |
| Surcharge (income above Rs 10m) | 9% of tax | None | Removed |
Comparison of salaried rates. TY 2026 = July 2025 to June 2026; TY 2027 = July 2026 to June 2027.
The practical result: anyone earning Rs 183,333 a month or less pays exactly what they paid last year. The saving starts above that line and grows with income. On Rs 250,000 a month the drop is Rs 2,000 a month. On Rs 500,000 it is Rs 14,750.
Salary tax slabs 2026-27: monthly and annual
FBR publishes the slabs as annual amounts. The monthly column below is simply the annual limit divided by 12, rounded to the nearest rupee, so you can see where your payslip falls. The bars show the marginal rate of each band against the 35% top rate.
| Annual taxable salary (Rs) | Monthly equivalent (Rs) | Tax payable | Marginal rate |
|---|---|---|---|
| Up to 600,000 | Up to 50,000 | Nil | |
| 600,001 – 1,200,000 | 50,001 – 100,000 | 1% of amount above 600,000 | |
| 1,200,001 – 2,200,000 | 100,001 – 183,333 | Rs 6,000 + 11% above 1,200,000 | |
| 2,200,001 – 3,200,000 | 183,334 – 266,667 | Rs 116,000 + 20% above 2,200,000 | |
| 3,200,001 – 4,100,000 | 266,668 – 341,667 | Rs 316,000 + 25% above 3,200,000 | |
| 4,100,001 – 5,600,000 | 341,668 – 466,667 | Rs 541,000 + 29% above 4,100,000 | |
| 5,600,001 – 7,000,000 | 466,668 – 583,333 | Rs 976,000 + 32% above 5,600,000 | |
| Above 7,000,000 | Above 583,333 | Rs 1,424,000 + 35% above 7,000,000 |
Source: FBR Withholding Tax Rate Card, section 149 (Division I, Part I, First Schedule), updated per Finance Act, 2026.
The fixed amount in each row is not a separate charge. It is the total tax on all the lower bands added together. For example, Rs 116,000 is 1% of the second band (Rs 6,000) plus 11% of the third band (Rs 110,000). That shortcut is what lets you calculate any salary in one line.
How to calculate tax on your salary, step by step
- Start with taxable salary, not gross. Take your basic pay plus taxable allowances. Leave out exempt items, such as medical allowance up to 10% of basic salary where your employer does not reimburse medical bills.
- Make it annual. Multiply the monthly taxable figure by 12. Add any bonus, arrears or leave encashment you expect to receive during the tax year.
- Find your band. Locate the row in the slab table where your annual figure sits.
- Apply the row formula. Tax = fixed amount + rate × (annual salary − lower limit of the band).
- Subtract tax credits you can prove, such as an approved pension fund contribution.
- Divide by 12 to get the normal monthly deduction, then subtract it from monthly salary to get take-home pay.
Skip the arithmetic
Type a monthly taxable salary for a quick estimate. The full calculator also works in reverse, from take-home pay back to gross.
Worked examples
The three people below are hypothetical. Their numbers were chosen to show a middle slab, a high slab and a mid-year bonus.
- Annual taxable salary:
150,000 × 12 = 1,800,000. - Rs 1,800,000 sits in the 1,200,001 – 2,200,000 band.
- Amount above the lower limit:
1,800,000 − 1,200,000 = 600,000. - Tax:
6,000 + 11% × 600,000 = 6,000 + 66,000 = 72,000a year. - Monthly:
72,000 ÷ 12 = 6,000.
- Annual taxable salary:
500,000 × 12 = 6,000,000. - That falls in the 5,600,001 – 7,000,000 band.
- Amount above the lower limit:
6,000,000 − 5,600,000 = 400,000. - Tax:
976,000 + 32% × 400,000 = 976,000 + 128,000 = 1,104,000a year. - Monthly:
1,104,000 ÷ 12 = 92,000.
- Without the bonus, her annual salary is Rs 3,000,000. Tax:
116,000 + 20% × 800,000 = 276,000, which is Rs 23,000 a month. - From July to December her employer deducts
6 × 23,000 = 138,000. - In January the projected annual income becomes
3,000,000 + 300,000 = 3,300,000, now in the 25% band. - New annual tax:
316,000 + 25% × 100,000 = 341,000. - Still to deduct:
341,000 − 138,000 = 203,000, spread over January to June, about203,000 ÷ 6 = 33,833a month.
Take-home pay at common salaries
This table shows income tax only. Your actual payslip may also show provident fund, EOBI or loan deductions, which are not taxes and are not included here.
| Monthly salary | Annual salary | Annual tax | Monthly tax | Monthly take-home | Effective rate |
|---|---|---|---|---|---|
| Rs 50,000 | 600,000 | 0 | 0 | 50,000 | 0.00% |
| Rs 75,000 | 900,000 | 3,000 | 250 | 74,750 | 0.33% |
| Rs 100,000 | 1,200,000 | 6,000 | 500 | 99,500 | 0.50% |
| Rs 150,000 | 1,800,000 | 72,000 | 6,000 | 144,000 | 4.00% |
| Rs 200,000 | 2,400,000 | 156,000 | 13,000 | 187,000 | 6.50% |
| Rs 250,000 | 3,000,000 | 276,000 | 23,000 | 227,000 | 9.20% |
| Rs 300,000 | 3,600,000 | 416,000 | 34,667 | 265,333 | 11.56% |
| Rs 350,000 | 4,200,000 | 570,000 | 47,500 | 302,500 | 13.57% |
| Rs 500,000 | 6,000,000 | 1,104,000 | 92,000 | 408,000 | 18.40% |
| Rs 750,000 | 9,000,000 | 2,124,000 | 177,000 | 573,000 | 23.60% |
| Rs 1,000,000 | 12,000,000 | 3,174,000 | 264,500 | 735,500 | 26.45% |
Amounts in rupees. Monthly figures rounded to the nearest rupee. Assumes the same taxable salary for all 12 months and no tax credits.
Look at the effective rate column. Even at Rs 1 million a month, the government takes about a quarter of salary, not 35%. The top rate only bites on the part above Rs 583,333 a month.
Is there a surcharge on salary in 2026-27?
No, not for salaried individuals. Section 4AB of the Income Tax Ordinance used to add a surcharge on top of normal tax once taxable income crossed Rs 10 million. For salaried people it was 10% and then 9% in tax year 2026. The Finance Act, 2026 withdrew it for salaried persons from 1 July 2026.
The difference is large at the top. Someone on Rs 1 million a month paid Rs 3,685,290 for the year under the old slabs with the 9% surcharge. Under the new slabs the bill is Rs 3,174,000, a fall of Rs 511,290.
The 10% surcharge still applies to non-salaried individuals and associations of persons above Rs 10 million, according to reporting on FBR's explanatory circular for the Finance Act, 2026. If you have large business or rental income alongside your job, ask a tax adviser how it interacts with your salary.
Filer vs non-filer: does it change salary tax?
Not directly. The section 149 salary slabs are the same whether or not your name is on the Active Taxpayers List (ATL). Your employer applies the same table to everyone.
Filer status matters in other places. Non-filers face higher withholding on things like property purchases and sales, vehicle registration and some banking transactions. Selling a plot as a non-filer, for example, costs noticeably more in advance tax; our property transfer tax calculator for Punjab shows the gap side by side.
Filing a return is also how you claim refunds and tax credits. A salaried person who never files stays a non-filer for every other transaction, even after paying salary tax for years.
Tax credits and exemptions that lower the bill
Credits reduce tax at your average rate; they do not move you into a lower band. The main ones open to salaried people are:
- Approved voluntary pension schemes (section 63). Credit on contributions of up to 20% of taxable income for the year.
- Donations to approved non-profits (section 61). Allowed on the lower of the donation and 30% of taxable income; 15% where the recipient is an associate.
- Zakat deducted under the Zakat and Usher Ordinance. Treated as a deductible allowance from income. If you are working out how much is due, our zakat calculator covers gold, silver and savings.
- Profit on a home loan. A credit is available on profit paid to a bank or regulated lender for a house up to 2,500 sq ft or a flat up to 2,000 sq ft, once per 15 tax years.
Here is how a credit works in numbers. Sana from Example 1 pays Rs 72,000 on Rs 1,800,000, an average rate of 4%. If she puts Rs 100,000 into an approved pension fund, her credit is 100,000 × 4% = 4,000, bringing her tax to Rs 68,000. A higher earner with a 20% average rate would save Rs 20,000 on the same contribution.
Your employer can adjust credits in your monthly deduction only if you hand over the documents, such as the pension fund certificate. Otherwise you claim them in your return.
The 25% tax reduction for full-time teachers and researchers had a sunset date of 30 June 2025 in the summaries checked for this article. Its status for tax year 2027 could not be confirmed from an official source, so ask your institution's accounts office before counting on it.
How your employer deducts tax each month
Section 149 of the Income Tax Ordinance makes your employer the collector. At each salary payment, the employer must deduct tax at your average rate on the salary it expects to pay you for the full year. In plain terms:
- Payroll estimates your salary for the whole tax year, including known bonuses.
- It works out annual tax on that estimate using the slab table.
- It subtracts tax already deducted in earlier months and spreads the rest over the months left, correcting any earlier over- or under-deduction as it goes.
- It deposits the tax with FBR and files withholding statements under section 165, which link the payment to your CNIC.
Because of step 3, an increment, a bonus or proof of a pension contribution can change your deduction mid-year.
If you joined in the middle of the year, tell HR about salary from your previous employer for the same tax year. If you don't, your new employer will assume a lower annual income, deduct too little, and you may owe the balance when you file.
At the end of the year, or when you leave, ask for a salary and tax deduction certificate. You will need it to fill your return correctly.
How to check your salary tax on FBR Iris
FBR's online system, Iris, is where you file your return and where your employer's deductions should show up against your CNIC.
- Log in with your CNIC as user name. First-time users register as an individual and receive codes on their mobile and email.
- Open a return: Declaration → Returns/Statements (Original) → Normal Return, then choose the tax year. Salaried people usually get the 114(I) form.
- Enter salary in the employment section exactly as shown on your employer's certificate.
- Check the tax deducted under section 149 in the adjustable tax area. Iris pre-fills some withholding figures from employer statements; compare every line with your certificate and payslips.
- Add credits such as pension contributions, attach the wealth statement, and submit.
If tax was deducted but does not appear, the usual cause is that your employer filed its statement late or with a wrong CNIC. Ask HR to correct the statement before you file, because missing entries can turn a nil-payable return into a demand.
For the return covering tax year 2026 (salary from July 2025 to June 2026), FBR extended the deadline twice, most recently to 31 October 2026. Returns for tax year 2027, the year these new slabs cover, will be due in late 2027.
After filing, you can confirm your filer status through the ATL check on FBR's e-services, or by sending an SMS to 9966 in this format: ATL 1234512345671 (ATL, a space, then your 13-digit CNIC). Details are on FBR's active taxpayer status page.
Common mistakes people make
- Applying the top rate to the whole salary. A person earning Rs 200,000 a month is in the 20% band but pays an effective 6.5%, not 20%.
- Using gross pay instead of taxable pay. Exempt medical allowance and reimbursements do not belong in the calculation.
- Mixing up tax years. Salary for June 2026 is taxed under tax year 2026 slabs; salary for July 2026 onward uses the new ones.
- Forgetting a second job or a previous employer. Two salaries combine into one annual figure. Each employer deducting on its own share alone leaves a shortfall.
- Panicking over a big bonus-month deduction. The extra tax is a catch-up for the whole year, as Hina's example shows, not a new rate.
- Assuming salary tax makes you a filer. You join the ATL only by filing a return, no matter how much your employer withheld.
- Not keeping the deduction certificate. Without it, matching Iris figures and claiming a refund becomes slow.
If your monthly tax looks wrong, run your taxable salary through the salary tax calculator and take the result to HR.
Frequently asked questions
What are the salary tax slabs for 2026-27 in Pakistan?
Eight bands on annual taxable salary: nil up to Rs 600,000; 1% up to Rs 1.2 million; 11% up to Rs 2.2 million; 20% up to Rs 3.2 million; 25% up to Rs 4.1 million; 29% up to Rs 5.6 million; 32% up to Rs 7 million; and 35% above that. Each rate applies only to income inside its band.
How much tax is deducted on a Rs 100,000 monthly salary in 2026-27?
Rs 500 a month. Annual salary is Rs 1,200,000, and 1% of the Rs 600,000 above the tax-free limit is Rs 6,000 a year.
How much tax is paid on Rs 250,000 per month?
Rs 23,000 a month, or Rs 276,000 a year. That leaves Rs 227,000 in hand, Rs 2,000 a month more than under last year's slabs.
Is the 9% surcharge still charged on salaried people?
No. The Finance Act, 2026 withdrew the surcharge for salaried individuals from 1 July 2026. Non-salaried individuals with income above Rs 10 million still pay a 10% surcharge.
Do non-filers pay more tax on salary?
No. Salary is taxed at the same slab rates for filers and non-filers. Non-filers pay more on other transactions such as property, vehicles and some bank dealings.
When do the new slabs start?
From 1 July 2026, the first day of tax year 2027. Your July 2026 salary, paid in late July or early August, should already reflect them.
My employer deducted too much tax. How do I get it back?
File your return on Iris, declare the correct salary and the full amount deducted, and the excess becomes refundable. You can also ask HR to adjust it in the remaining months of the same tax year.
Is a salary of Rs 50,000 a month taxable?
No. Rs 50,000 a month is Rs 600,000 a year, which is the upper limit of the nil band. One rupee more and the 1% rate starts on that extra amount only.
Sources
- FBR Withholding Tax Rate Card, updated per Finance Act, 2026 (section 149 slabs)
- Express Tribune: budget 2026-27 cuts salaried rates and ends surcharge
- Vialto Partners: Pakistan employment tax, Finance Act 2026 summary
- PkRevenue: FBR withdraws 9% surcharge on salaried persons
- PwC Worldwide Tax Summaries: Pakistan individual deductions
- ProPakistani: return deadline extended to 31 October 2026
- FBR: check active taxpayer status
This article explains the law in general terms and is not personal tax advice. Payroll practice differs between employers, and FBR can issue later clarifications.