Pakistan Salary Tax Calculator 2026-27 & 5-Year FBR Comparison

FBR Income Tax Slabs 2026-2027 for Salaried Individuals (Finance Act 2026)

For tax year 2026-27, running from 1 July 2026 to 30 June 2027, salaried individuals in Pakistan are taxed under 8 income slabs set out in Division I, Part I of the First Schedule to the Income Tax Ordinance 2001. Annual taxable income up to PKR 600,000 remains entirely exempt, and the top marginal rate of 35% now applies above PKR 7,000,000 of taxable income.

You are taxed as a salaried individual where salary makes up more than 75% of your total taxable income. Your employer is required to withhold the tax from each month’s pay under section 149 and deposit it against your CNIC, which is why the figure on your payslip should equal one twelfth of the annual amount below.

What changed from Tax Year 2025-26

Relief targeted at the middle brackets: the Rs 2.2M-3.2M rate falls to 20%, and two new bands (29% and 32%) soften the climb so the 35% top rate now begins above Rs 7,000,000. The 9% section 4AB surcharge on salary was also abolished, taking the top marginal impact from 38.15% back to a flat 35%.

The practical effect is concentrated in the middle of the income distribution. On a gross salary of PKR 3,600,000 a year (PKR 300,000 a month), the annual tax is PKR 416,000 in TY 2026-27 against PKR 466,000 in TY 2025-26 and PKR 550,000 in TY 2024-25.

The section 4AB surcharge has been abolished for salary

This is the other headline change for 2026-27, and it is worth stating plainly because most published tables have not caught up. The 9% surcharge that section 4AB charged on salaried taxpayers with taxable income above PKR 10,000,000 has been withdrawn by the Finance Act 2026. A salaried taxpayer now faces a flat 35% top marginal rate rather than the 38.2% that the surcharge produced.

It applied for two years before that — 10% for TY 2024-25 under the Finance Act 2024, reduced to 9% for TY 2025-26 by the Finance Act 2025 — and the calculator still applies it automatically when you select either of those years. It also survives at 10% for business and non-salaried income, which is now the only place it is charged.

5-Year FBR Salary Tax Slab History (TY 2022-23 to TY 2026-27)

Salary tax in Pakistan has moved sharply over five years. The Finance Act 2023 raised the rates above Rs 2.4 million; the Finance Act 2024 raised nearly every bracket and added the section 4AB surcharge; the Finance Acts of 2025 and 2026 then reversed much of that increase for low and middle incomes. The table below shows what a salaried individual actually pays at each salary level in each of the five years.

Which year was cheapest for salaried taxpayers?

It depends on where you sit on the income curve, which is why the comparison mode above is the reliable answer. Two patterns hold across the five years:

• TY 2024-25 was the heaviest year at almost every income level. At PKR 3,000,000 a year the tax was PKR 380,000, against PKR 276,000 today.
• Below roughly Rs 3.3 million a year the current rates are the lightest of the five, and above that the old TY 2022-23 structure stays cheaper — its 25% band ran all the way to PKR 6,000,000, whereas the current table has already reached 29% by PKR 4,100,000 and 32% by PKR 5,600,000.

Slab tables for every tax year

How to Calculate Income Tax on Salary in Pakistan (Step-by-Step)

The method is fixed by statute and takes about two minutes by hand. The worked example below follows a gross salary of PKR 300,000 a month through Tax Year 2026-27.

Step 1 — Annualise your gross salary

The tax year runs from 1 July to 30 June, so multiply your gross monthly salary by twelve and add any bonus you expect to receive during the year. Gross means before any deduction, including the tax itself.

PKR 300,000 × 12 = PKR 3,600,000 gross annual salary.

Step 2 — Subtract exempt income

Exempt items leave the tax net entirely. For most salaried employees the only one that applies is the medical allowance, exempt up to 10% of basic salary under clause (139)(b), Part I of the Second Schedule, provided you do not also receive free medical treatment or reimbursement.

Step 3 — Subtract deductible allowances

Deductible allowances reduce taxable income. The common one is Zakat paid under the Zakat and Ushr Ordinance 1980, deductible under section 60. What remains after steps 2 and 3 is your taxable income — PKR 3,600,000 in the example, since no exemptions have been claimed.

Step 4 — Find your slab and apply the formula

Locate the slab your taxable income falls into for the relevant year, then apply the statutory formula:

Tax = fixed amount for the slab + marginal rate × (taxable income − slab lower bound)

PKR 3,600,000 falls in the PKR 3,200,000 to PKR 4,100,000 slab, so the tax is PKR 316,000 + 25% × (PKR 3,600,000 − PKR 3,200,000) = PKR 416,000.

A common misreading is to apply the marginal rate to your whole salary. The rate applies only to the income above the slab’s lower bound, which is why the effective rate on this salary is 11.6% rather than 25%.

Step 5 — Check whether a surcharge applies

For Tax Year 2026-27 the answer is no: the Finance Act 2026 abolished the section 4AB surcharge on salary entirely, so nothing is added at this step however high the salary. If you are working out an earlier year, add 9% of the tax for TY 2025-26 or 10% for TY 2024-25, where taxable income exceeded PKR 10,000,000.

Step 6 — Deduct tax credits

Tax credits come off the tax, not the income. The main one available to salaried taxpayers is the section 63 credit for contributions to an approved Voluntary Pension Scheme, with the eligible contribution capped at 20% of taxable income.

Step 7 — Divide by twelve

Annual tax of PKR 416,000 divided by twelve gives PKR 34,667, which is the amount your employer should withhold from each payslip under section 149. Your net monthly take-home is PKR 265,333.

The same salary with the medical allowance claimed

Claiming the 10% medical allowance exemption on this salary removes PKR 360,000 from taxable income, bringing the annual tax down to PKR 326,000 — a saving of PKR 90,000 a year, or PKR 7,500 a month, with no reduction in take-home pay.

Salaried Class Tax Exemptions & Rebates under Income Tax Ordinance 2001

Four different mechanisms are loosely called “deductions”, and they do not have the same effect. Knowing which is which is the difference between a real saving and a smaller payslip:

• Exemptions remove income from the tax net. They reduce your tax without reducing your take-home pay.
• Deductible allowances reduce taxable income, but represent money you have actually paid out, so take-home falls too.
• Tax credits reduce the tax itself, after the slab rates have been applied.
• Payroll deductions reduce take-home pay and have no effect on tax at all.

Medical allowance — exemption, clause (139)(b)

Exempt up to 10% of basic salary, so long as you are not separately receiving free medical treatment or reimbursement of expenses from your employer. This is normally the single largest legitimate reduction available to a salaried taxpayer, and it costs nothing in take-home pay.

Zakat — deductible allowance, section 60

Zakat paid under the Zakat and Ushr Ordinance 1980 is deducted from taxable income. Zakat given privately outside that framework does not qualify. Because the money has genuinely left your hands, both taxable income and take-home pay fall.

Voluntary Pension Scheme — tax credit, section 63

A contribution to an approved pension fund earns a credit equal to your tax liability multiplied by your eligible contribution divided by your taxable income, with the eligible contribution capped at 20% of taxable income. Contributing the full 20% therefore cuts your tax bill by 20%. Contributing more than the cap produces no further credit.

Provident fund — payroll deduction

Your own contribution to a recognised provident fund comes out of already-taxed salary, so it lowers take-home pay without lowering taxable income. The tax benefit sits elsewhere: your employer’s matching contribution and the interest credited to the fund are exempt within the limits in Part I of the Sixth Schedule, and the accumulated balance is generally exempt on payment.

EOBI — payroll deduction

The employee contribution is 1% of the notified minimum wage, currently PKR 40,000 a month, with the employer contributing 5%. It funds your old-age benefit entitlement and is not deductible from taxable income.

Deductions the calculator does not apply automatically

Several reliefs depend on circumstances the tool cannot know, so they are left out rather than guessed at. Chief among them are the section 60C deduction for profit paid on a house-building loan, the section 61 credit for charitable donations to approved institutions, the treatment of salary arrears under section 12(7), and the exemptions for approved gratuity and commutation of pension. If any of these apply to you, treat the figures here as a starting point and confirm the position with a practitioner.

Salaried vs Non-Salaried Tax Rates in Pakistan

The Ordinance taxes salaried and non-salaried individuals on two different rate curves. You fall under the salaried rates when salary is more than 75% of your taxable income; below that threshold — freelancers, consultants, business individuals and associations of persons — the non-salaried rates apply, and they are far steeper.

The non-salaried curve starts at 15% on income just above PKR 600,000 where the salaried rate is 1%, and tops out at 45% against 35% for salaried taxpayers. Read the full salaried vs non-salaried comparison for the complete slab tables and the 75% test.

Frequently Asked Questions (Income Tax Pakistan)

Answers to the questions salaried taxpayers ask most about FBR salary tax, withholding under section 149, and the exemptions available to the salaried class.