Salary Tax in Pakistan Explained: FY 2026-27 Slabs with Examples

If you are a salaried person in Pakistan, your employer deducts income tax from your pay before it reaches your account. Most people see the number on the payslip and never learn how it was worked out. The method is simple once you see it, and understanding it helps you check your payslip, plan a raise and file your return with confidence.

Which year are we talking about?

Pakistan's financial year runs from 1 July to 30 June. The year from 1 July 2026 to 30 June 2027 is called FY 2026-27, and for tax purposes it is Tax Year 2027. The rates below are the salaried-individual slabs reported for that year after the Finance Act 2026. Earlier years had different slabs, so do not use an old payslip or an old article to estimate this year's tax.

The FY 2026-27 salaried slabs

These slabs apply to individuals whose salary is more than 75% of their total taxable income. The amounts are annual.

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

Budget reports for this year also said the extra surcharge on salaried people was removed. Because we could not confirm the final wording on the FBR site, check this point on your own payslip or with FBR.

Tax is charged band by band

This is the part most people get wrong. Pakistan uses a progressive system. When you cross into a higher slab, the higher rate applies only to the rupees inside that slab, not to your whole salary. A raise can never make your take-home pay smaller because of the slabs alone.

The "Rs 6,000 + ..." figures in the table are simply the tax on all the lower bands added up. For example, the full second band is Rs 600,000 at 1% = Rs 6,000. The full third band is Rs 1,000,000 at 11% = Rs 110,000, so tax at the top of that band is 6,000 + 110,000 = Rs 116,000, which is exactly the starting figure of the next row.

Worked examples (monthly salary)

Multiply your monthly taxable salary by 12, apply the slabs, then divide the tax by 12 to see the monthly deduction.

Monthly salary	Annual	Annual tax	Monthly tax
Rs 50,000	600,000	Rs 0	Rs 0
Rs 100,000	1,200,000	Rs 6,000	Rs 500
Rs 150,000	1,800,000	Rs 72,000	Rs 6,000
Rs 250,000	3,000,000	Rs 276,000	Rs 23,000
Rs 500,000	6,000,000	Rs 1,104,000	Rs 92,000

Here is the Rs 150,000 case in detail. Annual income is 1,800,000. The first 600,000 is tax-free. The next 600,000 (up to 1,200,000) is taxed at 1%, which is Rs 6,000. The remaining 600,000 (up to 1,800,000) is taxed at 11%, which is Rs 66,000. Total: 6,000 + 66,000 = Rs 72,000 a year, or Rs 6,000 a month. That is an effective rate of 4%, even though the top slab you touched was 11%.

Notice how the effective rate (tax divided by income) is always lower than the marginal rate (the rate on your last rupee). When you ask "how much of my next raise goes to tax?", the marginal rate is the answer.

What counts as taxable salary?

Taxable salary is more than just the basic pay. It generally includes:

• Basic salary, house rent allowance, utility and conveyance allowances.
• Bonuses, overtime and commissions.
• The taxable value of perks such as a company car for private use, if your employer provides one.

Some items can be exempt or taxed differently, and the rules change from year to year. Common examples are certain medical benefits, provident fund contributions within limits and gratuity. Your employer's payroll team applies these rules, so ask them how your payslip is split.

Ways to check and reduce what you pay legally

• Check your annual projection. Employers deduct tax in equal monthly instalments based on the expected yearly salary. If you get a mid-year raise or bonus, deductions adjust later.
• Keep tax certificates. Ask for your annual salary tax certificate. You need it when you file.
• Claim tax credits you qualify for. The law has credits for things like certain donations and approved pension contributions, subject to limits and conditions. Check what applies to you.
• File your return every year. Even if your employer deducted tax, filing keeps you on the active taxpayer list, which usually means lower withholding rates on bank transactions, property and vehicle purchases than a non-filer pays.
• Salary from abroad or freelance income follows different rules from a normal employer salary. If you are a freelancer, a tax advisor is worth the fee.

Common mistakes

• Applying the top rate to the whole salary instead of band by band.
• Mixing up monthly and annual numbers. The slabs are annual.
• Using last year's slabs. They change with each budget.
• Forgetting that a bonus is taxed at your marginal rate, so a big bonus can look heavily taxed. It is the same slab system, not a special penalty.

Where to confirm the official rates

The legal source is the Income Tax Ordinance, 2001 as amended by the Finance Act 2026. FBR publishes rate cards on fbr.gov.pk. If the numbers on your payslip do not match this guide, ask your employer which slab and exemptions they used, and compare with FBR's page.

To try your own salary, open the salary tax calculator. If you plan to take a loan against your income, see our guide on how EMI works.