How salary tax works in Pakistan for 2026-27
Pakistan names a tax year after the year in which it ends. Tax year 2027 runs from 1 July 2026 to 30 June 2027, and most people call it 2026-27. Its rates come from the Finance Act 2026, which was published in the Gazette on 26 June 2026 and applies from the July 2026 payroll.
The salaried table applies when salary makes up more than 75% of your taxable income. Your employer works out your yearly salary, applies the slabs, and deducts the tax in equal parts from each month’s pay.
Salary tax slabs for 2026-27 (tax year 2027)
| Yearly taxable salary | Tax |
|---|---|
| Up to Rs 600,000 | 0% |
| 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% above Rs 1,200,000 |
| Rs 2,200,001 to Rs 3,200,000 | Rs 116,000 + 20% above Rs 2,200,000 |
| Rs 3,200,001 to Rs 4,100,000 | Rs 316,000 + 25% above Rs 3,200,000 |
| Rs 4,100,001 to Rs 5,600,000 | Rs 541,000 + 29% above Rs 4,100,000 |
| Rs 5,600,001 to Rs 7,000,000 | Rs 976,000 + 32% above Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% above Rs 7,000,000 |
Source: FBR’s Income Tax Ordinance, 2001 as amended up to 30 June 2026 (First Schedule, Part I, Division I), checked on 21 October 2026.
What changed from 2025-26
The first three slabs, up to Rs 2.2 million a year (about Rs 183,000 a month), are the same as last year. Above that, rates fell:
- Rs 2.2 million to 3.2 million: 23% down to 20%
- Rs 3.2 million to 4.1 million: 30% down to 25%
- Rs 4.1 million to 5.6 million: 35% down to 29%
- Rs 5.6 million to 7 million: 35% down to 32%
- Above Rs 7 million: still 35%, but it now starts at Rs 7 million instead of Rs 4.1 million
The Finance Act 2026 also removed the 9% surcharge that salaried people paid in 2025-26 when taxable income was above Rs 10 million.
Worked example: Rs 250,000 a month
- Yearly salary: Rs 250,000 × 12 = Rs 3,000,000.
- That falls in the Rs 2,200,001 to Rs 3,200,000 slab.
- Tax: Rs 116,000 + 20% × (Rs 3,000,000 − Rs 2,200,000) = Rs 116,000 + Rs 160,000 = Rs 276,000 a year.
- Monthly deduction: Rs 276,000 ÷ 12 = Rs 23,000, so take-home pay is Rs 227,000.
Under the 2025-26 rates the same salary paid Rs 116,000 + 23% × Rs 800,000 = Rs 300,000, or Rs 25,000 a month. The new rates save Rs 2,000 a month.
A bigger salary shows the bigger cut. At Rs 1,000,000 a month (Rs 12 million a year), 2026-27 tax is Rs 1,424,000 + 35% × Rs 5,000,000 = Rs 3,174,000. In 2025-26 the slab tax was Rs 3,381,000 plus a 9% surcharge of Rs 304,290, a total of Rs 3,685,290. That is Rs 511,290 less a year.
How your employer deducts the tax
Under section 149 of the Income Tax Ordinance, your employer estimates your salary for the whole tax year, works out the tax, and deducts it from each payment at your average rate. If your pay changes during the year, for example after an increment, the employer recalculates and spreads the difference over the remaining months. That is why the monthly figure can move slightly on your payslip even though your yearly tax follows the table.
Bonus, arrears and tax-free allowances
- Bonus: a bonus is added to your income for the year, so it is taxed at your top slab rate. If you earn Rs 200,000 a month and get a Rs 400,000 bonus, the bonus adds Rs 80,000 of tax (20%). Enter it in the bonus box to see the effect.
- Arrears: arrears are taxed in the year you receive them. If that pushes you into a higher slab, section 12(7) lets you ask for them to be taxed at the rates of the year you did the work.
- Medical allowance: up to 10% of basic salary is exempt when your employer does not provide free treatment or reimburse medical bills. Put the exempt amount in the tax-exempt allowance box.
Filer or non-filer?
Salary tax is the same for everyone. The higher rates for people who are not on the Active Taxpayers’ List do not apply to tax deducted from salary (Tenth Schedule, rule 10(a)). Being a filer still matters: non-filers pay more tax on things like property and vehicle purchases, and filing your return is how you claim a refund if too much tax was deducted.
Tips
- Check your payslip against the calculator. A large difference often means a missed exemption or an increment the employer has not yet spread over the year.
- Keep your salary certificate. You need it to file your return, which is due by 30 September after the tax year ends unless FBR extends the date.
- Before taking a car or home loan, check the instalment against your take-home pay with the EMI calculator or the loan calculator.
- To see your raise as a percentage, use the percentage calculator. For a full walk-through of the slabs, read our guide to Pakistan income tax slabs for 2026-27.