Pakistan Income Tax Slabs 2026-27: New Rates + Surcharge Abolished
Finance Bill 2026-27 cut marginal rates for Rs 2.2M-7M salaried brackets and abolished the 9% surcharge above Rs 10M. Exact new slabs + savings calculator.
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Pakistan's Federal Budget 2026-27 was presented on June 12, 2026 with the headline relief for salaried individuals: marginal tax rates cut across the Rs 2.2 million to Rs 7 million annual income brackets, the structure expanded from 6 to 8 slabs (new Rs 5.6M-7M slab at 32%), and the Section 4AB 9% surcharge on salaried income above Rs 10 million abolished entirely. For a salaried professional earning Rs 500,000 per month (Rs 6 million annually), the change saves roughly Rs 147,000 per year. For Rs 1,000,000+ monthly earners, total savings exceed Rs 250,000 per year. This guide explains the exact new slabs, the math behind the savings, what changed vs the still-current Finance Act 2025 (in effect until June 30, 2026), and how to compute your specific take-home under the new rules.
What changed in Finance Bill 2026-27 for salaried class?
The Federal Budget 2026-27 announced on June 12, 2026 introduced four major changes affecting salaried individuals:
- Marginal rate reductions on middle and upper brackets. Rs 2.2M-3.2M dropped from 23% to 20% (3 points). Rs 3.2M-4.1M dropped from 30% to 25% (5 points). Rs 4.1M-5.6M dropped from 35% to 29% (6 points).
- New 7th slab introduced. A new Rs 5.6M-7M bracket at 32% marginal rate was inserted, splitting the previous broad 4.1M+ band into more granular gradation.
- Section 4AB 9% surcharge abolished. Previously, salaried individuals earning above PKR 10 million paid an additional 9% surcharge on top of slab tax. This surcharge is entirely removed under Finance Bill 2026-27.
- Lower slabs unchanged. The Rs 0-600K (0%), Rs 600K-1.2M (1%), and Rs 1.2M-2.2M (11% + Rs 6,000 base) brackets remain identical to FY 2025-26, providing continuity for lower-income earners.
The Finance Bill 2026-27 takes effect from July 1, 2026 (start of fiscal year 2026-27 / tax year 2027), pending formal passage of the Finance Act 2026.
Pakistan FY 2026-27 salaried tax slabs (complete table)
The new 8-slab structure effective July 1, 2026:
| Annual taxable income (PKR) | Tax rate | Cumulative tax at slab top |
|---|---|---|
| Up to 600,000 | 0% | Rs 0 |
| 600,001 to 1,200,000 | 1% on excess over 600K | Rs 6,000 |
| 1,200,001 to 2,200,000 | Rs 6,000 + 11% on excess over 1.2M | Rs 116,000 |
| 2,200,001 to 3,200,000 | Rs 116,000 + 20% on excess over 2.2M | Rs 316,000 |
| 3,200,001 to 4,100,000 | Rs 316,000 + 25% on excess over 3.2M | Rs 541,000 |
| 4,100,001 to 5,600,000 | Rs 541,000 + 29% on excess over 4.1M | Rs 976,000 |
| 5,600,001 to 7,000,000 | Rs 976,000 + 32% on excess over 5.6M | Rs 1,424,000 |
| Above 7,000,000 | Rs 1,424,000 + 35% on excess over 7M | (continues) |
Section 4AB surcharge: ABOLISHED for salaried individuals. Previous 9% surcharge on tax payable when annual taxable income exceeded Rs 10 million is removed entirely.
For an instant calculation on your specific salary, use our Pakistan FBR Salary Tax Calculator with the FY 2026-27 dropdown selected.
FY 2025-26 vs FY 2026-27 slab comparison
Side by side, to see exactly what dropped:
| Income bracket | 2025-26 rate | 2026-27 rate | Change |
|---|---|---|---|
| Up to 600K | 0% | 0% | No change |
| 600K-1.2M | 1% | 1% | No change |
| 1.2M-2.2M | 11% | 11% | No change |
| 2.2M-3.2M | 23% | 20% | -3 percentage points |
| 3.2M-4.1M | 30% | 25% | -5 percentage points |
| 4.1M-5.6M | 35% | 29% | -6 percentage points |
| 5.6M-7M | 35% | 32% | NEW SLAB, -3 points vs old top |
| Above 7M | 35% | 35% | No change in marginal rate |
| Above 10M surcharge | +9% on tax | 0% (abolished) | Surcharge eliminated |
The biggest beneficiaries are middle-to-upper management earners in the Rs 3.2M-5.6M annual bracket (Rs 270K-470K monthly), who see 5-6 point marginal rate drops.
How much you save: worked examples by salary
Below is the FY 2026-27 vs FY 2025-26 tax for common Pakistani salary points (annual figures, no other deductions, assumes salaried individual filing return):
Rs 100,000 per month (Rs 1,200,000 annually): - FY 2025-26 tax: Rs 6,000/year (effective rate 0.5%) - FY 2026-27 tax: Rs 6,000/year (effective rate 0.5%) - Savings: Rs 0 (no change in lower brackets)
Rs 200,000 per month (Rs 2,400,000 annually): - FY 2025-26 tax: Rs 162,000/year (Rs 116,000 + 23% × 200K = Rs 162K) - FY 2026-27 tax: Rs 156,000/year (Rs 116,000 + 20% × 200K = Rs 156K) - Savings: Rs 6,000/year, Rs 500/month
Rs 300,000 per month (Rs 3,600,000 annually): - FY 2025-26 tax: Rs 466,000/year (Rs 346,000 + 30% × 400K = Rs 466K) - FY 2026-27 tax: Rs 416,000/year (Rs 316,000 + 25% × 400K = Rs 416K) - Savings: Rs 50,000/year, Rs 4,167/month
Rs 400,000 per month (Rs 4,800,000 annually): - FY 2025-26 tax: Rs 861,000/year (Rs 616,000 + 35% × 700K = Rs 861K) - FY 2026-27 tax: Rs 744,000/year (Rs 541,000 + 29% × 700K = Rs 744K) - Savings: Rs 117,000/year, Rs 9,750/month
Rs 500,000 per month (Rs 6,000,000 annually): - FY 2025-26 tax: Rs 1,251,000/year (Rs 616,000 + 35% × 1.9M = Rs 1,281K... actually: Rs 616K + 35% × 1.9M = Rs 1,281K) - FY 2026-27 tax: Rs 1,104,000/year (Rs 976,000 + 32% × 400K = Rs 1,104K) - Savings: Rs 147,000/year, Rs 12,250/month
Rs 1,000,000 per month (Rs 12,000,000 annually): - FY 2025-26 base tax: Rs 3,381,000 + Rs 304,290 (9% surcharge) = Rs 3,685,290/year - FY 2026-27 tax: Rs 3,174,000/year (no surcharge) - Savings: Rs 511,290/year, Rs 42,608/month (this includes the surcharge abolition benefit)
The combination of slab rate cuts and surcharge abolition makes the new regime particularly favorable for the Rs 5M+ annual salary band.
What about the 9% surcharge abolition specifically?
Section 4AB of the Income Tax Ordinance was introduced via Finance Act 2024 (effective July 1, 2024) as a 10% surcharge on income tax payable for taxpayers whose annual taxable income exceeded PKR 10 million. Finance Act 2025 reduced this to 9% specifically for salaried individuals.
Finance Bill 2026-27 entirely abolishes the surcharge for salaried persons. The abolition was specifically requested by Senate Standing Committee on Finance and acknowledged the relatively low contribution of the surcharge to total revenue compared to the high political and behavioral costs (incentivizing salary structure manipulation, gross-up demands, and movement to consulting/business arrangements).
The surcharge may still apply to other categories (business individuals, AOPs); confirm against your specific filing status. For salaried individuals filing under Section 149 PAYE, the surcharge is gone effective July 1, 2026.
When does Finance Bill 2026-27 take effect?
| Date | What happens |
|---|---|
| June 12, 2026 | Budget 2026-27 presented in National Assembly |
| June 12 to June 30, 2026 | Finance Bill 2026-27 debate, possible amendments, passage |
| July 1, 2026 | New slabs and surcharge abolition effective from this date |
| Tax Year 2027 | Covers income earned from July 1, 2026 to June 30, 2027 |
Income earned before July 1, 2026 (still under FY 2025-26 Finance Act 2025) is taxed at the old slabs and may still attract the 9% surcharge if above Rs 10M. Income earned from July 1, 2026 onward uses the new FY 2026-27 slabs and the abolished surcharge.
Payroll systems (HR / accounts departments) will reprogram tax deductions effective July 2026 salary cycles. Your July 2026 salary slip will reflect the lower deductions for the first time.
Quick-reference: monthly take-home under FY 2026-27
For Pakistani salaried professionals comparing job offers or planning budgets, the new take-home figures after FY 2026-27 tax:
| Monthly gross | Annual gross | Annual tax FY 2026-27 | Monthly take-home |
|---|---|---|---|
| Rs 50,000 | Rs 600,000 | Rs 0 | Rs 50,000 |
| Rs 100,000 | Rs 1,200,000 | Rs 6,000 | Rs 99,500 |
| Rs 150,000 | Rs 1,800,000 | Rs 72,000 | Rs 144,000 |
| Rs 200,000 | Rs 2,400,000 | Rs 156,000 | Rs 187,000 |
| Rs 250,000 | Rs 3,000,000 | Rs 256,000 | Rs 228,667 |
| Rs 300,000 | Rs 3,600,000 | Rs 416,000 | Rs 265,333 |
| Rs 400,000 | Rs 4,800,000 | Rs 744,000 | Rs 338,000 |
| Rs 500,000 | Rs 6,000,000 | Rs 1,104,000 | Rs 408,000 |
| Rs 750,000 | Rs 9,000,000 | Rs 1,944,000 | Rs 588,000 |
| Rs 1,000,000 | Rs 12,000,000 | Rs 3,174,000 | Rs 735,500 |
Run your exact figure through our Pakistan FBR Salary Tax Calculator with the FY 2026-27 option selected for a precise breakdown including the slab-by-slab math.
What didn't change in Finance Bill 2026-27
For balance, here is what stays the same:
- Lowest exempt bracket Rs 600,000 unchanged. Salaries up to Rs 50,000/month remain 100% tax-free.
- Rs 600K to 1.2M slab at 1% unchanged. Lower-middle income earners (Rs 50K-100K monthly) see no rate change.
- Rs 1.2M to 2.2M slab at 11% unchanged. Mid-income earners (Rs 100K-183K monthly) keep the same effective slab.
- Top rate 35% unchanged. Income above Rs 7M continues to attract 35% marginal rate (though now without the 9% surcharge on top).
- Filer vs non-filer slabs identical. Salary slab rates are the same for both; filer status affects withholding tax on transactions (property, vehicle, banking, electricity).
- Self-employed business and AOP slabs. Different schedule applies to business income and is not covered by this guide.
What to do before July 1, 2026
For salaried professionals, three practical actions ahead of the new tax year:
- Recalculate your expected July 2026 onwards monthly take-home. Use our calculator with FY 2026-27 selected to project the new figure. Adjust budgets, EMI plans, and savings rates accordingly.
- Confirm with employer / HR that payroll is updated. Some smaller employers may lag on payroll software updates. Ensure your July 2026 tax deduction reflects the new slabs (not old). Compare your salary slip July vs June 2026 to verify.
- File your FY 2025-26 return on time (by September 30, 2026) to remain on the Active Taxpayer List for filer benefits across the year. Filing under the old slabs is straightforward via FBR IRIS portal.
For income earned in the still-running FY 2025-26 (until June 30, 2026), tax is computed under the OLD slabs (Finance Act 2025) with the 9% surcharge still applicable above Rs 10M. The new rules apply only to income earned from July 1, 2026 onward.
Pairs with other Pakistani financial tools
For complete household financial planning under the new tax regime:
- Pakistan FBR Salary Tax Calculator for exact tax on any specific salary
- Loan EMI Calculator for car or home loan planning with new take-home figures
- Currency Converter for USD / SAR / AED conversions for expat or freelance income
- EasyPaisa vs JazzCash Fee Calculator for cheapest method to handle the additional take-home cash flow
- AC Running Cost Calculator Pakistan for managing the larger summer utility bill from the increased disposable income
Frequently Asked Questions
Sources & references
- Pakistan FBR Salary Tax Calculator 2026-27Calculate Pakistan FBR income tax on your salary for new FY 2026-27 (Finance Bill 2026-27, effective July 1, 2026), FY 2025-26, and FY 2024-25. Progressive slab math, surcharge abolished for salaried, monthly + annual breakdown.
- Loan EMI CalculatorEMI for personal, car, home loans + Diminishing Musharaka math for halal financing.
- Currency ConverterConvert between 150+ world currencies using live, frequently updated mid-market exchange rates.
- Compound Interest CalculatorCompound returns in PKR or USD with daily, monthly, quarterly or yearly frequency.