If you draw a monthly salary in Pakistan, the most important number in your payslip after your gross pay is the income tax deducted from it. Every July the rules can change, and the Finance Act 2026-27 changed them again. The National Assembly passed it on 23 June 2026 and it was gazetted on 26 June 2026, with the new slabs applying from 1 July 2026. This guide explains the slabs in plain language, shows what you will actually pay at common salary levels, and sets out what is different from last year.
The FY 2026-27 slabs at a glance
For tax year 2027 (income earned between 1 July 2026 and 30 June 2027) salaried individuals are taxed under eight slabs. The first Rs 600,000 of annual income is tax-free, which equals Rs 50,000 a month. Above that, tax rises in steps from 1% to a top rate of 35% on income above Rs 7 million a year.
| Annual taxable income (Rs) | Monthly equivalent (Rs) | Rate | Tax payable |
|---|---|---|---|
| Up to 600,000 | Up to 50,000 | 0% | Nil |
| 600,001 to 1,200,000 | 50,001 to 100,000 | 1% | 1% of the amount above Rs 600,000 |
| 1,200,001 to 2,200,000 | 100,001 to 183,333 | 11% | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| 2,200,001 to 3,200,000 | 183,334 to 266,667 | 20% | Rs 116,000 + 20% of the amount above Rs 2,200,000 |
| 3,200,001 to 4,100,000 | 266,668 to 341,667 | 25% | Rs 316,000 + 25% of the amount above Rs 3,200,000 |
| 4,100,001 to 5,600,000 | 341,668 to 466,667 | 29% | Rs 541,000 + 29% of the amount above Rs 4,100,000 |
| 5,600,001 to 7,000,000 | 466,668 to 583,333 | 32% | Rs 976,000 + 32% of the amount above Rs 5,600,000 |
| Above 7,000,000 | Above 583,333 | 35% | Rs 1,424,000 + 35% of the amount above Rs 7,000,000 |
The "tax payable" column is the formula you apply. For example, if your annual taxable salary is Rs 3,000,000, you fall in the fourth slab, so your tax is Rs 116,000 plus 20% of the Rs 800,000 above Rs 2,200,000, which is Rs 276,000 a year or Rs 23,000 a month.
How marginal rates work (and why a raise never costs you money)
A common worry is that a pay rise which crosses into a higher slab will leave you worse off. It will not. Pakistan taxes salary in layers: only the rupees that fall inside a slab are taxed at that slab's rate. Imagine your annual income is Rs 2,300,000. The first Rs 600,000 is untaxed, the next Rs 600,000 is taxed at 1%, the next Rs 1,000,000 at 11%, and only the last Rs 100,000 at 20%. A raise that pushes you over a threshold simply means the extra rupees above the threshold are taxed at the next rate, while everything below stays as before.
What you will actually pay: monthly examples
The table shows federal income tax per month and the resulting take-home pay for common salary levels, using the formula above. These figures cover income tax only. Provident fund, EOBI, insurance and loan deductions are separate.
| Monthly gross salary | Income tax per month | Take-home per month | Effective rate |
|---|---|---|---|
| Rs 50,000 | Rs 0 | Rs 50,000 | 0.0% |
| Rs 75,000 | Rs 250 | Rs 74,750 | 0.3% |
| Rs 100,000 | Rs 500 | Rs 99,500 | 0.5% |
| Rs 150,000 | Rs 6,000 | Rs 144,000 | 4.0% |
| Rs 200,000 | Rs 13,000 | Rs 187,000 | 6.5% |
| Rs 300,000 | Rs 34,667 | Rs 265,333 | 11.6% |
| Rs 500,000 | Rs 92,000 | Rs 408,000 | 18.4% |
Notice how gentle the system is in the lower range. Someone on Rs 75,000 a month pays only Rs 250, and someone on Rs 100,000 pays just Rs 500. The effective rate does not reach 10% until monthly pay is about Rs 270,000, and even a Rs 500,000 monthly salary is taxed at an effective rate of about 18%, well below the 32% marginal rate it touches at the top.
What changed from FY 2025-26?
The previous structure had six slabs, with marginal rates of 23%, 30% and 35% applying to income from Rs 2.2 million upward. The new structure has eight slabs and spreads the burden more gradually. The first three slabs (up to Rs 2.2 million) were left unchanged, so people earning up to about Rs 183,000 a month see no difference. Above that, rates were cut, and the 9% surcharge that applied to salaried individuals earning above Rs 10 million a year was abolished.
| Annual income band (Rs) | FY 2025-26 rate | FY 2026-27 rate |
|---|---|---|
| 2,200,001 to 3,200,000 | 23% | 20% |
| 3,200,001 to 4,100,000 | 30% | 25% |
| 4,100,001 to 5,600,000 | 35% | 29% |
| 5,600,001 to 7,000,000 | 35% | 32% |
| Above 7,000,000 | 35% (+9% surcharge above Rs 10m) | 35% (no surcharge) |
The saving depends on where you sit. On Rs 250,000 a month the tax falls by about Rs 2,000 a month, on Rs 400,000 by about Rs 9,750, and on Rs 500,000 by about Rs 14,750 a month, because more of your income passes through the cheaper bands. Our salary tax calculator shows the saving for your exact salary.
What counts as taxable salary?
Tax is calculated on your taxable salary for the year, which generally includes basic pay, taxable allowances, bonuses and certain benefits. Some items are treated differently, and employers sometimes structure packages with tax-efficient components such as a provident fund contribution. Your payroll team can tell you which parts of your package are taxable and how your monthly withholding is calculated. If you receive a large bonus in one month, remember that tax is computed on the annual total, so withholding may be adjusted across the year.
Practical ways to plan around the slabs
- Compare offers by net pay. A higher gross offer that replaces provident fund or medical benefits may leave you with less overall.
- Know your marginal rate. If you are in the 20% slab, each extra Rs 10,000 of salary adds Rs 2,000 of tax, so you keep Rs 8,000.
- Stay on the Active Taxpayers List. Even salaried people who file benefit from lower withholding on bank transactions, vehicle and property transactions.
- Keep documents. Salary certificates, tax deduction certificates and proof of donations or other credits make filing smoother.
Where to go next
Use the salary tax calculator to test your own number, read how much you keep at each pay level in our take-home pay chart, or see how pay compares by role in the salary by job pages. This guide is for general information, not tax advice, and rates should be confirmed against the Finance Act and FBR notifications or with a registered tax consultant.
Frequently Asked Questions
What is the tax-free limit for salaried people in Pakistan in 2026-27?
Annual taxable salary up to Rs 600,000, which is Rs 50,000 per month, is exempt from income tax. Only the part above that threshold is taxed.
How many income tax slabs are there for salaried individuals in 2026-27?
There are eight slabs, with rates of 0%, 1%, 11%, 20%, 25%, 29%, 32% and 35%, each applied to the portion of income inside that band.
Was the surcharge removed for FY 2026-27?
Yes. The 9% surcharge on salaried individuals earning above Rs 10 million a year was abolished under the Finance Act 2026-27.
When do the new tax slabs apply?
They apply from 1 July 2026 for tax year 2027, so they affect salary paid from July 2026 onward.
Does crossing a slab reduce my take-home pay?
No. Slabs are marginal, so only the income inside each band is taxed at that band's rate. A pay rise always increases take-home pay.
How much tax do I pay on Rs 100,000 a month?
About Rs 6,000 a year, or Rs 500 a month, because only the Rs 600,000 above the exemption is taxed at 1%.