Pakistan Income Tax Slabs 2026-27: New Rates After Budget Explained
Pakistan’s Budget 2026-27, announced by Finance Minister Muhammad Aurangzeb on June 12, 2026, cuts income tax rates across four salary slabs and fully abolishes the surcharge on high-income salaried individuals — effective July 1, 2026.
If you earn between Rs 183,333 and Rs 583,333 per month, your tax rate has been reduced by 3 to 6 percentage points. Use our free Pakistan Income Tax Calculator — updated with the new FY27 rates — to see your exact monthly savings.
Confirmed Income Tax Slabs for FY 2026-27
The table below shows the complete confirmed slab structure as announced in the National Assembly on June 12, 2026, effective from July 1, 2026:
| Annual Income (Rs) | Monthly Equivalent | FY26 Rate | FY27 Rate | Change |
|---|---|---|---|---|
| Up to 600,000 | Up to 50,000 | 0% | 0% | No change |
| 600,001 – 1,200,000 | 50,001 – 100,000 | 1% | 1% | No change |
| 1,200,001 – 2,200,000 | 100,001 – 183,333 | 11% | 11% | No change |
| 2,200,001 – 3,200,000 | 183,334 – 266,667 | 23% | 20% | −3 pp |
| 3,200,001 – 4,100,000 | 266,668 – 341,667 | 30% | 25% | −5 pp |
| 4,100,001 – 5,600,000 | 341,668 – 466,667 | 35% | 29% | −6 pp |
| 5,600,001 – 7,000,000 | 466,668 – 583,333 | 35% | 32% | −3 pp |
| Above 7,000,000 | Above 583,333 | 35% | 35% | No change |
The four highlighted slabs cover salaries between Rs 183,333 and Rs 583,333 per month. If your salary falls outside this range, your slab rate has not changed — but the surcharge abolition may still benefit you if you earn above Rs 10 million annually.
Surcharge Fully Abolished
Previously, salaried individuals earning more than Rs 10 million annually paid an additional surcharge on their tax liability — 9% in FY26 (reduced from 10% the year before).
In FY27, this surcharge has been completely abolished. This is described by the Finance Minister as meeting a long-standing demand of the salaried class, with no partial-year transition — the abolition applies fully from July 1, 2026.
Tax Formula for FY 2026-27 (Each Slab)
| Annual Income Range | Tax Formula (FY27) |
|---|---|
| Up to Rs 600,000 | Fully exempt — Rs 0 |
| Rs 600,001 – 1,200,000 | 1% of amount above Rs 600,000 |
| Rs 1,200,001 – 2,200,000 | Rs 6,000 + 11% above Rs 1,200,000 |
| Rs 2,200,001 – 3,200,000 | Rs 116,000 + 20% above Rs 2,200,000 |
| Rs 3,200,001 – 4,100,000 | Rs 316,000 + 25% above Rs 3,200,000 |
| Rs 4,100,001 – 5,600,000 | Rs 541,000 + 29% above Rs 4,100,000 |
| Rs 5,600,001 – 7,000,000 | Rs 976,000 + 32% above Rs 5,600,000 |
| Above Rs 7,000,000 | Applicable rate on amount above Rs 7,000,000 |
What You Actually Save — Real Monthly Numbers
Here is how the new FY27 rates translate into actual monthly tax deductions compared to FY26:
| Monthly Salary | Annual Income | FY26 Annual Tax | FY27 Annual Tax | Monthly Saving |
|---|---|---|---|---|
| Rs 100,000 | Rs 1.2 million | Rs 6,000 | Rs 6,000 | Rs 0 |
| Rs 200,000 | Rs 2.4 million | Rs 162,000 | Rs 156,000 | Rs 500 |
| Rs 225,000 | Rs 2.7 million | Rs 231,000 | Rs 216,000 | Rs 1,250 |
| Rs 250,000 | Rs 3.0 million | Rs 300,000 | Rs 276,000 | Rs 2,000 |
| Rs 275,000 | Rs 3.3 million | Rs 376,000 | Rs 341,000 | Rs 2,917 |
| Rs 300,000 | Rs 3.6 million | Rs 466,000 | Rs 416,000 | Rs 4,167 |
| Rs 400,000 | Rs 4.8 million | Rs 841,000 | Rs 773,000 | Rs 5,667 |
The biggest relative savings are for those earning between Rs 266,668 and Rs 583,333 per month — where rate cuts of 5–6 percentage points apply. Use our Pakistan Income Tax Calculator to get your exact figure including all deductions.
Who Does NOT Benefit From This Budget?
Salaried individuals earning up to Rs 183,333 per month (Rs 2.2 million annually) see no change in their slab rates for FY27. Their tax formula remains identical to FY26. This covers a large segment of middle-income salaried workers, including many government employees at mid-grade levels.
However, government employees in this bracket still benefit from the separate 7% salary increase announced for federal government employees — see below.
Salary Increase & Minimum Wage — Budget 2026-27
Alongside the tax slab changes, the budget announced:
| Measure | Detail |
|---|---|
| Federal govt employee salary increase | 7% |
| Federal govt pension increase | 7% |
| Minimum monthly wage | Increased by Rs 3,700 → now Rs 40,700/month |
| Ad hoc allowances | 2022 (15%) and 2025 (10%) allowances merged into basic pay |
Merging ad hoc allowances into basic pay raises the pensionable salary base — a structural benefit that compounds over time for retirement benefits, not just a one-time bump.
When Do These New Rates Apply?
| Event | Date |
|---|---|
| Budget announced | June 12, 2026 |
| New rates take effect | July 1, 2026 |
| First payslip with new rates | July 2026 salary |
| FY26 tax year return (old rates) | Filed September 2026 |
Pakistan’s tax year for income tax purposes runs from July 1 to June 30. Income earned between July 2025 and June 2026 is assessed under FY26 (old) slabs — the return filed in September 2026 still uses old rates. Income earned from July 2026 onward falls under the new FY27 slabs shown above.
Three-Year Tax Relief Trend (FY25–FY27)
This is the third consecutive year of tax relief for Pakistan’s salaried class:
| Slab | FY24 | FY25 | FY26 | FY27 |
|---|---|---|---|---|
| First slab rate | 5% | 2.5% | 1% | 1% |
| Second slab rate | 15% | – | 11% | 11% |
| Rs 2.2M–3.2M slab | – | – | 23% | 20% |
| Rs 3.2M–4.1M slab | – | – | 30% | 25% |
| Rs 4.1M–5.6M slab | – | – | 35% | 29% |
| Rs 5.6M–7M slab | – | – | 35% | 32% |
The most dramatic single-year cuts in FY27 are concentrated in the upper-middle income brackets — Rs 2.2 million to Rs 7 million annually — where reductions range from 3 to 6 percentage points.
Pakistan Income Tax Calculator 2026-27 — Updated
Our calculator has been updated with the confirmed FY27 slabs from Budget 2026-27. Enter your monthly or annual salary to get:
- Your exact FY27 income tax liability
- Comparison with FY26 tax (see your savings)
- Monthly take-home pay after tax
- Surcharge calculation if applicable (income above Rs 10 million)
👉 Calculate Your New Pakistan Income Tax Now →
Frequently Asked Questions
What are the new income tax slabs in Pakistan for 2026-27?
Pakistan’s Budget 2026-27 reduced income tax rates in four slabs: income between Rs 2.2 million and Rs 3.2 million annually is now taxed at 20% (down from 23%), Rs 3.2 million to Rs 4.1 million at 25% (down from 30%), Rs 4.1 million to Rs 5.6 million at 29% (down from 35%), and Rs 5.6 million to Rs 7 million at 32% (down from 35%). These rates take effect from July 1, 2026.
Has the surcharge on salaried individuals been removed?
Yes. The 9% surcharge that applied to salaried individuals earning more than Rs 10 million annually has been fully abolished in Budget 2026-27, effective July 1, 2026, with no partial-year transition.
When do the new tax rates start applying to my salary?
The new FY27 tax rates apply from July 1, 2026 — the start of Pakistan’s new fiscal year. You will see the change reflected in your July 2026 salary slip. Income earned between July 2025 and June 2026 is still taxed under the old FY26 rates when you file your annual return in September 2026.
How much will I save if I earn Rs 300,000 per month?
On a monthly salary of Rs 300,000 (Rs 3.6 million annually), your tax rate drops from 30% to 25% under the new slab. This results in an annual tax saving of approximately Rs 50,000 — or about Rs 4,167 per month in extra take-home pay.
Did everyone get a tax cut in this budget?
No. Salaried individuals earning up to Rs 183,333 per month (Rs 2.2 million annually) saw no change in their slab rates for FY27 — their tax formula remains the same as FY26. The four slab cuts apply specifically to income between Rs 2.2 million and Rs 7 million annually.
What other changes were announced for government employees?
Federal government employees received a 7% salary increase and a matching 7% increase in pensions. The minimum monthly wage was raised by Rs 3,700 to Rs 40,700. Two previously announced ad hoc allowances (from 2022 and 2025) were merged into basic pay, which raises the pensionable salary base for retirement benefits.
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Last updated: June 2026. Tax figures based on the Finance Bill 2026-27 as presented by Finance Minister Muhammad Aurangzeb in the National Assembly on June 12, 2026. All FY27 rates take effect July 1, 2026. Always verify with FBR (fbr.gov.pk) for official confirmation before filing.