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If you earn a salary in Pakistan, your employer deducts income tax from your pay every month. For tax year 2026-27, which runs from 1 July 2026 to 30 June 2027, the first Rs 600,000 a year (Rs 50,000 a month) is tax-free. Above that, the rate rises in steps from 1% to 35%. A salary of Rs 200,000 a month pays Rs 13,000 a month in tax, and you keep Rs 187,000.
This guide shows the new slabs, how to work out your own tax by hand, what happens when you get a bonus, and why moving into a higher slab never cuts your take-home pay. To skip the maths, enter your salary in the Pakistan salary tax calculator.
The salary tax slabs for 2026-27
The rates come from the Finance Act 2026, which replaced the salary tax table in the Income Tax Ordinance 2001. The FBR calls this tax year 2027, but most people say 2026-27. The table is for people whose salary is more than 75% of their taxable income, which covers almost every employee.
| Yearly taxable income | Tax for 2026-27 |
|---|---|
| Up to Rs 600,000 | 0% |
| Rs 600,001 to Rs 1,200,000 | 1% of the amount over Rs 600,000 |
| Rs 1,200,001 to Rs 2,200,000 | Rs 6,000 + 11% of the amount over Rs 1,200,000 |
| Rs 2,200,001 to Rs 3,200,000 | Rs 116,000 + 20% of the amount over Rs 2,200,000 |
| Rs 3,200,001 to Rs 4,100,000 | Rs 316,000 + 25% of the amount over Rs 3,200,000 |
| Rs 4,100,001 to Rs 5,600,000 | Rs 541,000 + 29% of the amount over Rs 4,100,000 |
| Rs 5,600,001 to Rs 7,000,000 | Rs 976,000 + 32% of the amount over Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% of the amount over Rs 7,000,000 |
The fixed amount in each row is simply the tax on all the slabs below it. For example, Rs 116,000 is 1% of Rs 600,000 (Rs 6,000) plus 11% of Rs 1,000,000 (Rs 110,000).
The Finance Act 2026 also removed the 9% surcharge that salaried people earning over Rs 10 million paid in 2025-26. So there is no surcharge on salary this year.
How to work out your tax in 4 steps
Step 1: Find your yearly taxable salary. Multiply your monthly taxable salary by 12 and add any bonus you expect this tax year. Taxable salary is your gross pay minus allowances that are exempt for you, such as a medical allowance of up to 10% of basic pay when your employer does not pay your medical bills.
Step 2: Find your slab. Look up the row your yearly figure falls in.
Step 3: Apply the formula.
Step 4: Check your payslip. Your employer does this same calculation under section 149 of the Income Tax Ordinance: it estimates your salary for the whole year and deducts one-twelfth of the tax each month.
Worked example: Rs 200,000 a month
- Yearly income: Rs 200,000 × 12 = Rs 2,400,000
- Slab: Rs 2,200,001 to Rs 3,200,000, so Rs 116,000 + 20% of the amount over Rs 2,200,000
- Amount over the slab start: Rs 2,400,000 − Rs 2,200,000 = Rs 200,000
- Tax: Rs 116,000 + 20% × Rs 200,000 = Rs 116,000 + Rs 40,000 = Rs 156,000 a year
- Monthly tax: Rs 156,000 ÷ 12 = Rs 13,000
- Take-home pay: Rs 200,000 − Rs 13,000 = Rs 187,000 a month
- Effective rate: Rs 156,000 ÷ Rs 2,400,000 = 6.5%
The effective rate is the share of your whole salary that goes in tax. It is much lower than the 20% slab rate, because the 20% only applies to the top Rs 200,000 of your income. You can check any percentage like this with how to calculate a percentage.
Monthly tax at common salaries
| Monthly salary | Yearly income | Yearly tax | Monthly tax | Take-home a month | Effective rate |
|---|---|---|---|---|---|
| Rs 50,000 | Rs 600,000 | Rs 0 | Rs 0 | Rs 50,000 | 0% |
| Rs 75,000 | Rs 900,000 | Rs 3,000 | Rs 250 | Rs 74,750 | 0.3% |
| Rs 100,000 | Rs 1,200,000 | Rs 6,000 | Rs 500 | Rs 99,500 | 0.5% |
| Rs 150,000 | Rs 1,800,000 | Rs 72,000 | Rs 6,000 | Rs 144,000 | 4.0% |
| Rs 200,000 | Rs 2,400,000 | Rs 156,000 | Rs 13,000 | Rs 187,000 | 6.5% |
| Rs 250,000 | Rs 3,000,000 | Rs 276,000 | Rs 23,000 | Rs 227,000 | 9.2% |
| Rs 300,000 | Rs 3,600,000 | Rs 416,000 | Rs 34,667 | Rs 265,333 | 11.6% |
| Rs 400,000 | Rs 4,800,000 | Rs 744,000 | Rs 62,000 | Rs 338,000 | 15.5% |
| Rs 500,000 | Rs 6,000,000 | Rs 1,104,000 | Rs 92,000 | Rs 408,000 | 18.4% |
| Rs 1,000,000 | Rs 12,000,000 | Rs 3,174,000 | Rs 264,500 | Rs 735,500 | 26.5% |
What changed from 2025-26
The cuts only help people earning more than Rs 2.2 million a year, which is about Rs 183,000 a month. Below that, the slabs are the same as last year.
| Monthly salary | Monthly tax 2025-26 | Monthly tax 2026-27 | Saving a month |
|---|---|---|---|
| Rs 100,000 | Rs 500 | Rs 500 | Rs 0 |
| Rs 200,000 | Rs 13,500 | Rs 13,000 | Rs 500 |
| Rs 300,000 | Rs 38,833 | Rs 34,667 | Rs 4,166 |
| Rs 500,000 | Rs 106,750 | Rs 92,000 | Rs 14,750 |
| Rs 1,000,000 | Rs 307,108 | Rs 264,500 | Rs 42,608 |
A lower tax bill is welcome, but prices keep rising too. If your salary did not go up this year, inflation may take more from you than the tax cut gives back.
How a bonus is taxed
A bonus is salary, so it is added to your yearly income and taxed at your slab rate. There is no separate bonus rate.
Say you earn Rs 200,000 a month and get a Rs 300,000 bonus:
- Yearly income: Rs 2,400,000 + Rs 300,000 = Rs 2,700,000
- Tax: Rs 116,000 + 20% × (Rs 2,700,000 − Rs 2,200,000) = Rs 116,000 + Rs 100,000 = Rs 216,000
- Extra tax because of the bonus: Rs 216,000 − Rs 156,000 = Rs 60,000, or 20% of the bonus
Your employer often takes most of that extra tax in the month the bonus is paid, so that month's deduction can look very high. Over the year, it evens out.
Key idea A higher slab rate only applies to the part of your income inside that slab. Earning one more rupee can never make your take-home pay fall.
The slab myth
Many people fear that a raise will push them into a higher slab and leave them worse off. It cannot. At Rs 1,200,000 a year you pay Rs 6,000. At Rs 1,300,000 you pay Rs 6,000 + 11% × Rs 100,000 = Rs 17,000. Your income went up by Rs 100,000 and your tax by Rs 11,000, so you keep Rs 89,000 of the raise.
If you save that extra Rs 89,000 a year rather than spend it, the rule of 72 shows how fast savings can double at a given profit rate.
What this does not cover
- Other income. Rent, profit on savings, dividends, capital gains and business income have their own rates and rules.
- Tax credits. Donations to approved charities and contributions to approved pension funds can reduce your tax, so your final figure may be a little lower.
- Withholding taxes elsewhere. If you are not on the Active Taxpayers List, you pay higher withholding tax on things like bank cash withdrawals, vehicle registration, property and some electricity bills.
A quick checklist
- Work out your yearly taxable salary, including any bonus.
- Find your slab in the table and apply the formula, or use the salary tax calculator.
- Compare the result with the tax on your payslip. If it is very different, ask your HR or accounts team.
- File your return on IRIS each year to stay on the Active Taxpayers List.
- Keep receipts for donations and pension contributions, which can lower your tax.
Frequently asked questions
How much salary is tax-free in Pakistan in 2026-27?
Up to Rs 600,000 a year, or Rs 50,000 a month. Between Rs 600,000 and Rs 1,200,000 you pay just 1% on the part above Rs 600,000, so a Rs 100,000 monthly salary pays Rs 500 a month.
Do I still need to file a tax return if my employer deducts tax?
Yes, if your taxable income is above the tax-free limit. Filing keeps you on the FBR's Active Taxpayers List, which means lower withholding tax on many everyday transactions. The return is filed online on IRIS, usually by 30 September after the tax year ends.
Is tax worked out on gross or net salary?
On taxable salary. That is your gross salary minus any allowance that is exempt for you. Most allowances, such as house rent and conveyance, are taxable in full, so for most people taxable salary is close to gross salary.
Is there a surcharge on high salaries this year?
No. The Finance Act 2026 removed the 9% surcharge on salaried people with taxable income above Rs 10 million. The surcharge for other individuals and associations of persons is a separate rule.
Where can I check the official rates?
In the Finance Act 2026 and the FBR's withholding tax rate card, both on the FBR website. The Pakistan salary tax calculator uses the same table and links to the source.
This article is for general education and is not financial advice. Rules, rates and products vary by lender and country. See our disclaimer.
