Income Tax Slabs Pakistan 2026-27: Salaried and Business

Quick answer: The income tax slabs Pakistan uses for 2026-27 (tax year 2027) keep the first Rs 600,000 tax-free. Salaried individuals then pay 1%, 11%, 20%, 25%, 29%, 32% and 35% above Rs 7 million. Non-salaried individuals and AOPs are reported to keep the 15% to 45% scale. Rates apply from 1 July 2026.

The Federal Budget 2026-27 changed salaried tax more than any budget in recent years. The middle and upper bands were cut, two new bands were added, and the point where the 35% rate starts moved from Rs 4.1 million to Rs 7 million. This guide sets out the income tax slabs Pakistan applies for tax year 2027, explains who counts as salaried, and works through monthly and annual examples so you can check your own payslip. It also covers the slabs for business income and the surcharge rules, and it flags clearly where published figures are still unconfirmed.

Important: This is general information, not tax advice. We compiled the slabs from published rate cards and reporting on the Finance Act 2026; we could not check every figure against the gazetted Act. Confirm the current rates on the Federal Board of Revenue website or with a tax practitioner before you file or set payroll, and check the withholding statements in IRIS against your payslips.

Tax year 2027 in brief

Pakistan's tax year runs from 1 July to 30 June and is named after the year in which it ends. Tax year 2027 therefore covers 1 July 2026 to 30 June 2027, which is why you will see the same rates described as "2026-27" and "tax year 2027". The Finance Act 2026 enacted the budget and took effect on 1 July 2026, so July 2026 payroll was the first month under the new salaried rates.

Two sets of income tax slabs Pakistan applies matter for most people:

• Salaried slabs apply when salary is more than 75% of your taxable income.
• Non-salaried slabs apply to other individuals, such as shopkeepers, consultants and freelancers billing local clients, and to associations of persons (AOPs) such as partnerships.

Companies pay a flat corporate rate rather than slabs, and some income, such as IT export proceeds, profit on debt or certain rent, can be taxed separately under its own rules.

Salaried income tax slabs Pakistan 2026-27

The table below shows the salaried schedule for tax year 2027 as published in several rate cards and calculators that cite the Finance Act 2026. Each row gives the fixed tax on income up to the lower limit, plus a rate on the excess.

Annual taxable income (Rs)	Tax payable
Up to 600,000	0%
600,001 to 1,200,000	1% of the amount above 600,000
1,200,001 to 2,200,000	6,000 + 11% of the amount above 1,200,000
2,200,001 to 3,200,000	116,000 + 20% of the amount above 2,200,000
3,200,001 to 4,100,000	316,000 + 25% of the amount above 3,200,000
4,100,001 to 5,600,000	541,000 + 29% of the amount above 4,100,000
5,600,001 to 7,000,000	976,000 + 32% of the amount above 5,600,000
Above 7,000,000	1,424,000 + 35% of the amount above 7,000,000

These are the income tax slabs Pakistan employers should be using for payroll from July 2026. The fixed amounts are internally consistent: for example, 316,000 + 25% of 900,000 equals 541,000, the fixed amount for the next band. That is a useful sanity check whenever you copy a rate card from a website.

What changed from tax year 2026

In tax year 2026, salaried income above Rs 2.2 million was taxed at 23%, then 30% above Rs 3.2 million and 35% above Rs 4.1 million, with a 9% surcharge for taxable income above Rs 10 million. For tax year 2027, published summaries report these changes:

• The 23% band became 20%.
• The 30% band became 25%.
• The old 35% band was split into 29% (Rs 4.1 to 5.6 million) and 32% (Rs 5.6 to 7 million), with 35% only above Rs 7 million.
• The 9% surcharge on salaried taxable income above Rs 10 million was reported as withdrawn.
• The 0%, 1% and 11% bands were unchanged, so salaries up to Rs 2.2 million a year see no difference.

Non-salaried slabs for business individuals and AOPs

For individuals whose salary is not more than 75% of taxable income, and for AOPs, rate cards for tax year 2027 report that the schedule was not changed by the Finance Act 2026. Treat this table as the reported position and check it against FBR's rate card.

Annual taxable income (Rs)	Tax payable
Up to 600,000	0%
600,001 to 1,200,000	15% of the amount above 600,000
1,200,001 to 1,600,000	90,000 + 20% of the amount above 1,200,000
1,600,001 to 3,200,000	170,000 + 30% of the amount above 1,600,000
3,200,001 to 5,600,000	650,000 + 40% of the amount above 3,200,000
Above 5,600,000	1,610,000 + 45% of the amount above 5,600,000

Reports also say the 10% surcharge under section 4AB continues for non-salaried individuals and AOPs with taxable income above Rs 10 million. Because the gap between the two scales is so wide, the 75% test matters: the same Rs 2.4 million can attract very different tax depending on how it is earned.

How to calculate your tax step by step

1. Add up taxable income for the tax year. Include salary and taxable perks, or business profit after allowable expenses. Leave out income taxed under a final or separate regime.
2. Apply the 75% test. If salary is more than 75% of taxable income, use the salaried table; otherwise use the non-salaried table.
3. Find your slab. Locate the row whose range contains your taxable income.
4. Calculate the excess. Subtract the lower limit of that slab from your income.
5. Apply the rate and add the fixed amount. Multiply the excess by the slab rate and add the fixed figure.
6. Add any surcharge, then subtract credits. Apply the surcharge if it applies to you, then deduct eligible tax credits and tax already withheld.
7. Divide by 12 for a monthly view. Employers spread the annual tax across the remaining payroll months, so your monthly deduction may differ slightly.

Worked examples: monthly and annual tax

The examples below use the reported tax year 2027 salaried slabs and assume no taxable perks, credits or other income.

Monthly salary (Rs)	Annual salary (Rs)	Calculation	Annual tax (Rs)	Monthly tax (Rs)
50,000	600,000	Within the 0% band	0	0
100,000	1,200,000	1% x 600,000	6,000	500
150,000	1,800,000	6,000 + 11% x 600,000	72,000	6,000
250,000	3,000,000	116,000 + 20% x 800,000	276,000	23,000
500,000	6,000,000	976,000 + 32% x 400,000	1,104,000	92,000
1,000,000	12,000,000	1,424,000 + 35% x 5,000,000	3,174,000	264,500

Example 1: Rs 250,000 a month, old versus new

Sana earns Rs 250,000 a month, or Rs 3,000,000 a year. Under tax year 2027 slabs her income sits in the 20% band:

• Excess over Rs 2,200,000: 3,000,000 - 2,200,000 = Rs 800,000
• Tax on the excess: 800,000 x 20% = Rs 160,000
• Annual tax: 116,000 + 160,000 = Rs 276,000, or Rs 23,000 a month

Under tax year 2026 slabs the same income was taxed at 23% on the excess: 116,000 + (800,000 x 23%) = 116,000 + 184,000 = Rs 300,000. Sana saves Rs 24,000 a year, about Rs 2,000 a month.

Example 2: Rs 500,000 a month

Annual salary is Rs 6,000,000. Under the new slabs: 976,000 + (6,000,000 - 5,600,000) x 32% = 976,000 + 128,000 = Rs 1,104,000. Under tax year 2026 slabs: 616,000 + (6,000,000 - 4,100,000) x 35% = 616,000 + 665,000 = Rs 1,281,000. The saving is Rs 177,000 a year, or Rs 14,750 a month.

Example 3: Rs 2.4 million from business, not salary

Bilal runs a small consultancy and earns Rs 2,400,000 of taxable profit with no salary. The non-salaried table applies: 170,000 + (2,400,000 - 1,600,000) x 30% = 170,000 + 240,000 = Rs 410,000. A salaried person on the same income would pay 116,000 + (200,000 x 20%) = Rs 156,000. The difference is why business owners should keep good records of deductible expenses and invoice correctly.

How employers apply new slabs mid-year

Payroll tax is an estimate spread over 12 months. At the start of the year your employer projects your annual taxable salary, calculates the tax under the current slabs and divides it across the remaining months. When your salary changes, a bonus is paid or you join partway through the year, the projection is redone and the monthly deduction moves up or down. That is why two colleagues on the same monthly salary can see different deductions in a given month, and why your December figure may not match July. The year-end salary certificate shows the total actually deducted, and that total is what you claim in your return.

If you had two employers in the same year, each one may have applied the 0% band to the salary it paid, which can leave you short at year end. Tell your second employer about earlier salary so it can withhold correctly, or budget for the balance when you file.

How the income tax slabs Pakistan sets connect to your payslip and invoices

Employers deduct tax from salary every month under section 149 of the Income Tax Ordinance, 2001, based on estimated annual salary. Your payslip should show gross pay, the tax deducted and net pay; our guide on gross pay vs net pay explains the difference, and the salary slip format guide shows a clear layout. If your deduction looks wrong after July 2026, ask payroll whether the new slabs were applied.

Business individuals usually pay through withholding on the invoices they raise and through advance tax, then settle the balance in the annual return. Clients deduct tax on payments for services and supplies, and the rate often depends on whether you are on the Active Taxpayer List. Our explainer on withholding tax on invoices shows how to present the deduction, and the guide to the Active Taxpayer List in Pakistan explains why filer status changes the rate.

Freelancers earning in foreign currency should read the freelancer tax guide for Pakistan 2026 first: export proceeds are commonly taxed at 0.25% or 1% under a final regime, not under these slabs.

Checklist before you rely on a slab figure

• Confirm which tax year you are calculating: tax year 2026 returns use last year's slabs.
• Run the 75% salary test on your full taxable income.
• Separate income under final or separate regimes, such as IT exports, profit on debt and dividends.
• Check whether a surcharge applies above Rs 10 million.
• Recalculate the fixed amounts yourself to catch typos in online tables.
• Compare the result with tax withheld in your IRIS withholding statements.
• Keep invoices, payslips and bank certificates for the year.

Common mistakes

• Applying the top rate to all income. Only the slice above each limit is taxed at that band's rate.
• Using salaried rates on business income. If salary is 75% or less of taxable income, the much higher non-salaried scale usually applies.
• Mixing tax years. The new rates apply from 1 July 2026; returns for tax year 2026 use the old ones.
• Trusting a single calculator. Several sites published proposed Finance Bill rates in June and did not update them after the Act. Cross-check with FBR.
• Forgetting withholding already paid. Tax deducted on invoices, bank profit or utility bills is often adjustable against your final liability.
• Ignoring the return. Paying tax through payroll does not file your return; you still need to file to stay on the ATL.

Next steps

Use the income tax slabs Pakistan has set for 2026-27 in the tables above to estimate your tax, then compare the figure with your July to October payslips. When it is time to file, our step-by-step guide to filing an income tax return in Pakistan on IRIS walks through the form, and new taxpayers can start with how to get an NTN in Pakistan. If you sell taxable goods as well, the Finance Act 2026 sales tax changes may also affect you.

If you bill clients, our free invoice generator for Pakistan creates a PDF invoice in PKR in your browser, with your NTN and one tax line. It does not calculate income tax slabs, connect to IRIS or file anything with FBR. For more guides, browse our tax and compliance articles.